会计学原理英文课件：Chapter_03 ADJUSTING ACCOUNTS AND PREPARING FINANCIAL STATEMENTS

1、 2009 The McGraw-Hill Companies, Inc., 2009 The McGraw-Hill Companies, Inc., All Rights ReservedAll Rights ReservedADJUSTING ACCOUNTS AND PREPARING FINANCIAL STATEMENTSChapter 3McGraw-Hill/IrwinSlide 2McGraw-Hill/IrwinSlide 21234567891011121234Annually12MonthlyQuarterlySemiannuallyTHE ACCOUNTING PER

2、IODJanFebMarAprMayJunJulAug SepOctNovDecC1McGraw-Hill/IrwinSlide 3McGraw-Hill/IrwinSlide 3AccountingACCRUAL BASIS VS. CASH BASISAccrual BasisRevenues are recognized when earned and expenses are recognized when incurred.Cash BasisRevenues are recognized when cash is received and expenses recorded whe

3、n cash is paid.C2McGraw-Hill/IrwinSlide 4McGraw-Hill/IrwinSlide 4ACCRUAL BASIS VS. CASH BASISOn the cash basis the entire $2,400 would be recognized as insurance expense in 2009. No insurance expense from this policy would be recognized in 2010 or 2011, periods covered by the policy.C2McGraw-Hill/Ir

4、winSlide 5McGraw-Hill/IrwinSlide 5ACCRUAL BASIS VS. CASH BASISOn the accrual basis $100 of insurance expense is recognized in 2009, $1,200 in 2010, and $1,100 in 2011. The expense is matched with the periods benefited by the insurance coverage.C2McGraw-Hill/IrwinSlide 6McGraw-Hill/IrwinSlide 6We hav

5、e delivered theproduct to our customer,so I think we should recordthe revenue earned.RECOGNIZING REVENUES & EXPENSESRevenue Recognition PrincipleC2McGraw-Hill/IrwinSlide 7McGraw-Hill/IrwinSlide 7RECOGNIZING REVENUES & EXPENSESRevenue Recognition PrincipleMatching PrincipleSummaryof ExpensesR

6、entGasolineAdvertisingSalariesUtilitiesand . . . . $1,0005002,0003,000450. . . .Now that we haverecognized the revenue,lets see what expenseswe incurred togenerate that revenue.C2McGraw-Hill/IrwinSlide 8McGraw-Hill/IrwinSlide 8 An adjusting entry is recorded to bring an asset or liability account ba

7、lance to its proper amount.ADJUSTING ACCOUNTSPrepaid (Deferred) expenses*Unearned (Deferred) revenuesAccruedexpenseAccruedrevenuesFramework for Adjustments*including depreciationPaid (or received) cash before expense (or revenue) recognizedPaid (or received) cash after expense (or revenue) recognize

8、dAdjustmentsC3McGraw-Hill/IrwinSlide 9McGraw-Hill/IrwinSlide 9Here is the checkfor my 24-monthinsurance policy.PREPAID (DEFERRED) EXPENSESResources paid for prior to receiving the actual benefits.AssetExpenseUnadjustedBalanceCreditAdjustmentDebitAdjustmentP1McGraw-Hill/IrwinSlide 10McGraw-Hill/Irwin

9、Slide 10PREPAID INSURANCE On 12/1/09, FastForward paid $2,400 for insurance for 2-years (24-months, December 2009 through November 2011). FastForward recorded the expenditure as Prepaid Insurance on 12/31/09. What adjustment is required?637128P1McGraw-Hill/IrwinSlide 11McGraw-Hill/IrwinSlide 11SUPPL

10、IES During 2009, FastForward purchased $9,720 of supplies. FastForward recorded the expenditures in the asset account, “Supplies.” On December 31, 2009, a count of the supplies indicated $8,670 on hand, so $1,050 of supplies were used during December. What adjustment is required?126652P1McGraw-Hill/

11、IrwinSlide 12McGraw-Hill/IrwinSlide 12OTHER PREPAID EXPENSES1. Other prepaid expenses, such as Prepaid Rent, are accounted for exactly as Insurance and Supplies. 2. We should note that some prepaid expenses are both paid for and fully used up within a single period. 3. For example, a company may pay

12、 monthly rent on the first day of each month. This payment creates a prepaid expense on the first day of the month that fully expires by the end of the month.4. In these special cases, we can record the cash paid with a debit to the expense account instead of an asset account.P1McGraw-Hill/IrwinSlid

13、e 13McGraw-Hill/IrwinSlide 13Straight-LineDepreciationExpense= Asset Cost - Salvage Value Useful LifeDEPRECIATION Depreciation is the process of allocating the cost of a plant asset over its useful life in a systematic and rational manner.P1McGraw-Hill/IrwinSlide 14McGraw-Hill/IrwinSlide 14DEPRECIAT

14、ION On December 1, 2009, FastForward purchased equipment for $26,000 cash. The equipment has an estimated useful life of four years (48 months) and FastForward expects to sell the equipment at the end of its life for $8,000 cash. Lets record depreciation expense for the month ended December 31, 2009

15、.Dec. 2009DepreciationExpense= $26,000 - $8,000 48 months=$375 per monthP1McGraw-Hill/IrwinSlide 15McGraw-Hill/IrwinSlide 15Accumulated depreciation isa contra asset account.DEPRECIATION On December 1, 2009, FastForward purchased equipment for $26,000 cash. The equipment has an estimated useful life

16、 of four years (48 months) and FastForward expects to sell the equipment at the end of its life for $8,000 cash. Lets record depreciation expense for the month ended December 31, 2009.P1McGraw-Hill/IrwinSlide 16McGraw-Hill/IrwinSlide 16EquipmentDepreciation Expense1/1 26,00012/31 375Accumulated Depr

17、eciation12/31 375DEPRECIATIONP1McGraw-Hill/IrwinSlide 17McGraw-Hill/IrwinSlide 17$DEPRECIATIONP1McGraw-Hill/IrwinSlide 18McGraw-Hill/IrwinSlide 18UNEARNED (DEFERRED)REVENUESLiabilityRevenueUnadjustedBalanceCreditAdjustmentDebitAdjustmentWe will apply this cashyou gave us towardsyour total consulting

18、 fees.Cash received in advance of providing products or services.P1McGraw-Hill/IrwinSlide 19McGraw-Hill/IrwinSlide 19UNEARNED (DEFERRED)REVENUESOn December 26, 2009, FastForward agrees to provide consulting services to a client for a fixed fee of $3,000 for 60 days. On this date, the client pays the

19、 entire consulting fee in advance. FastForward makes the following entry:P1McGraw-Hill/IrwinSlide 20McGraw-Hill/IrwinSlide 20On December 31, earns some of the 5-days of consulting fees. Each day that passes results in consulting fees of $50 ($3,000 60).UNEARNED (DEFERRED)REVENUESP1McGraw-Hill/IrwinS

20、lide 21McGraw-Hill/IrwinSlide 21Were about one-halfdone with this job andwant to be paid forour work!Costs incurred in a period that areboth unpaid and unrecorded.ACCRUED EXPENSESExpenseLiabilityCreditAdjustmentDebitAdjustmentP1McGraw-Hill/IrwinSlide 22McGraw-Hill/IrwinSlide 2212/31/09Year endLast p

21、aydate12/26/09Next paydate1/9/10Record adjustingjournal entry.FastForwards employee earns $70 per day and is paid every two weeks on Friday. Year-end, 12/31/09, falls on a Wednesday. The last payday of 2009, is Friday, 12/26/09. From 12/26 until year-end is three working days. The employee has earne

22、d salaries of $210 for Monday through Wednesday. They will not be paid until the next Friday.ACCRUED SALARIES EXPENSESP1McGraw-Hill/IrwinSlide 23McGraw-Hill/IrwinSlide 23ACCRUED SALARIES EXPENSESFastForwards employee earns $70 per day and is paid every two weeks on Friday. Year-end, 12/31/09, the em

23、ployee has earned salaries of $210. P1McGraw-Hill/IrwinSlide 24McGraw-Hill/IrwinSlide 24FUTURE PAYMENT OFACCRUED EXPENSESOn January 9, 2010, FastForward will pay the payroll for the two weeks from December 26, 2009 through January 9, 2010. Here is the journal entry for the payroll:P1McGraw-Hill/Irwi

24、nSlide 25McGraw-Hill/IrwinSlide 25ACCRUED INTEREST EXPENSEFastForward borrowed $6,000 from First National Bank on December 1, 2009. The note bears interest at the annual rate of 6% and is due to be repaid in one year. Lets accrue interest for the month ended 12/31/09.P1McGraw-Hill/IrwinSlide 26McGra

25、w-Hill/IrwinSlide 26Yes, Ive completed yourconsulting job, but have nothad time to bill you yet.ACCRUED REVENUESAssetRevenueCreditAdjustmentDebitAdjustmentP1McGraw-Hill/IrwinSlide 27McGraw-Hill/IrwinSlide 27ACCRUED SERVICE REVENUESOn December 12, 2009, FastForward agrees to render consulting service

26、s under a 30-day fixed fee contract for $2,700 ($90 per day). All services are to be completed by January 10, 2010, when the client will pay in full.P1McGraw-Hill/IrwinSlide 28McGraw-Hill/IrwinSlide 28FUTURE RECEIPT OFSERVICE REVENUESOn January 10, 2010, FastForward completed its obligation under th

27、e consulting contract. The client was billed $2,700 and FastForward received $2,700 in cashRevenue in January10 days $90 = $900P1McGraw-Hill/IrwinSlide 29McGraw-Hill/IrwinSlide 29LINKS TO FINANCIAL STATEMENTSA1McGraw-Hill/IrwinSlide 30McGraw-Hill/IrwinSlide 30FastForward - Trial Balance - December 3

28、1, 2009First, the initial unadjusted amounts are added to the worksheet.P2McGraw-Hill/IrwinSlide 31McGraw-Hill/IrwinSlide 31Next, FastForwards adjustments are added.FastForward - Trial Balance - December 31, 2009P2McGraw-Hill/IrwinSlide 32McGraw-Hill/IrwinSlide 32Finally, the totals are determined.F

29、astForward - Trial Balance - December 31, 2009P2McGraw-Hill/IrwinSlide 33McGraw-Hill/IrwinSlide 33PREPARING FINANCIAL STATEMENTSLets use FastForwards adjusted trial balance to prepare the companys financial statements.P3McGraw-Hill/IrwinSlide 34McGraw-Hill/IrwinSlide 341. Prepare the Income StatementP3McGraw-Hi