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Understanding Adjusting Entries in the Accounting Cycle

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This lesson focuses on adjusting entries as part of the accounting cycle, crucial for reflecting accurate financial information at the end of a fiscal period. It highlights the process of making adjustments on a worksheet and recording adjusting entries in the journal to update general ledger accounts. Key concepts include the impact on Supplies, Supplies Expense, Prepaid Insurance, and Insurance Expense accounts. The guide addresses how to align ledger accounts with the fiscal period balances through systematic recording and posting procedures, ensuring financial accuracy.

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Understanding Adjusting Entries in the Accounting Cycle

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  1. LESSON 8-1 Recording Adjusting Entries

  2. Accounting Cycle: the series of accounting activities included in recording financial information for a fiscal period Adjustments: changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period Adjusting entries: journal entries recorded to update general ledger accounts at the end of a fiscal period TERMS

  3. What is the value of the Supplies Account at the end of the fiscal period? • $200 • What is your General Ledger Account Balance? • $700 • How do you get the Ledger to reflect the new balance?

  4. Two Steps: • Record Adjusting Entries in a Journal • Post in the General ledger • To Record Supplies adjustment: • What two accounts impacted and how? • To record Prepaid insurance: • What two accounts impacted and how? RECORD ADJUSTING ENTRIES Supplies Supplies Expense 500 500 Prepaid Insurance Insurance Expense 150 150

  5. STEP ONE • Record Adjustments in the Journal • Begin on Next journal page after last entries for the month (pg 8) • First line - center title of section “Adjusting Entries” • Next line – record entry • enter year, date, and account title (debit first) • No source document - enter Check mark in “Doc. No.” Page

  6. Post in the General Ledger STEP TWO Does your Ledger match the Fiscal Period Balances?

  7. TERM REVIEW page 205 • adjusting entries

  8. WTG 8-1 OYO 8-1 ASSIGNMENT Closing Entries

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