CHAPTER 3 EXERCISES: ADJUSTING ENTRIES

Bước 1: Liên quan đến revenue, expense => Debit Expense/ Credit Revenue
Bước 2: Pays cash before / Pay cash after (tiền đã mất/ nhận hay chưa):
● Nếu đã trả tiền cho chi phí rồi (tức là đã mua tài sản): Debit Expense & Credit
Assets
● Nếu đã thu tiền rồi (tức là có tiền trước khi làm dịch vụ, nợ: Unearned
revenue): Debit Unearned revenue & Credit Revenue
● Nếu chưa trả tiền cho chi phí: Debit Expense & Credit Payable
● Nếu chưa nhận tiền cho doanh thu: Debit Accounts receivable & Credit
Revenue

Exercise 1: Prepare adjusting entries on December 31 (year-end).

a. Topflight Company had $1,500 of store supplies at the beginning of the current year.
During this year, Topflight purchased $8,250 worth of store supplies. On December 31,
$1,125 worth of store supplies remained.
Supplies used = 1500 + 8250 – 1125 = 8625 => Debit Supplies expense, Credit …….
Date Accounts Debit Credit
31 Dec Supplies expense (E) 8625
Supplies (A) 8625

Supplies
1500 8625
8250
Balance: 1125

b. On January 1, 2010 a company paid $24,000 cash for 2-year of rent in advance and
adjusting entries are made at the end of each month. Calculate each month’s rental expense
and the balance of Prepaid Rent as of December 31, 2010. 
Rent expense/ month = 24,000/24 = $1,000
The balance of Prepaid Rent as of December 31, 2010 = 24,000 – 12 x 1000 = 12,000 debit
balance
01 Jan Prepaid Rent (A) 24,000
Cash (A) 24,000
31 Dec Rent expense (E) 1,000
Prepaid rent (A) 1,000

c. On Dec. 01 the Company purchased a car for use that costs $30,000. Estimated useful
life of the car is for 20 year and salvage value is equal to 6,000. Calculate the depreciation
expense for December 31 (the month ended) and prepare the journal entry to record that
expense.
Depreciation expense per month = (30000-6000)/(20*12) = 100
01 Dec Car (A) 30,000
Cash 30,000
31 Dec Depreciation Expense – Car (E) 100
Accumulated depreciation – Car 100
(contra asset account)

d. During the current year ended December 31, clients paid fees in advance for accounting
services amounting to $25,000. These fees were recorded in an account called Unearned
Accounting Fees. If $3,500 of these fees remains unearned on December 31 of this year,
present the December 31 adjusting entry to bring the accounts up to date. 
Unearned Accounting Fees = Unearned revenue = 25,000 before adjusting
31 December: Unearned fees = 3500; earned fee = Services revenue = 21500
Cash 25,000
Unearned Accounting fees (Unearned revenue) (L) 25,000
31 Dec Unearned Accounting fees (Unearned revenue) (L) 21,500
Services Revenue (E) 21,500

Unearned revenue (L)

21500 25000
Balance: 3500

e. On November 1, the company received 6 months' rent in advance from a tenant whose
rent is $700 per month. On December 31, the company record its revenue for 2-month rents
provided.
Unearned Revenue (L): công việc chưa hoàn thành
2 month revenue = 700 x 2
Nov 1 Cash 4,200
Unearned rent revenue (L) 4,200
31 Dec Unearned rent revenue (L) 1400
Rent revenue (E) 1400

f. The company has three office employees who each earn $100 per day for a work (paid on
Friday). The employees were paid on Friday, December 26, and have worked full days on
Monday, Tuesday, and Wednesday (December 29, 30, and 31).
31 Dec: Salaries expense = 3 days x 3 employees x $100/employee/day = 900.
Cash paid after expense recorded
31 Dec Salaries expense (E) 900
Salaries payable (L) 900
g. The company collects rent monthly from its tenants. One tenant whose rent is $750 per
month has not paid his rent for December. 
Cash received after revenue recorded
Unearned revenue (L): nhận tiền rồi, công việc chưa làm. Revenue is earned (công việc
hoàn thành)
Accounts receivable (A): chưa nhận tiền, công việc đã làm
31 Dec Accounts receivable (A) 750
Rent revenue (E) 750
h. The company has a bank loan and has incurred (but not recorded) interest expense of
$3,500 for the year ended December 31. The company must pay the interest on January 2
of the following year.
Interest expense (chi phí lãi vay) = 3500 in December
Cash paid after expense recorded
31 Dec Interest expense 3500
Interest payable (L) 3500
i. The company has an investment on 01 November with interest payment every three
months. The next payday will be on 31 January of the following year. The payment will be
$1,500 for three months.
Interest Revenue (tiền lãi thu về từ hoạt động đầu tư) = 2 tháng (1/11 đến 31/12) = 1500
*2/3 = 1000
31 Dec Interest receivable (A) 1000
Interest revenue 1000
Exercise 2:  Bella Beauty Salon's unadjusted balance of accounts for the current year
follows:

   
Requirement 1: Prepare adjusting entries and ledger T-accounts for the following:
a. An insurance policy examination showed $1,240 of expired insurance.
b. An inventory count showed $210 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. An employee hired a space behind the spa, rent revenues of $200 was unrecorded and
unpaid at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The
employee was paid last week but has worked four days this week for which she has not
been paid.
h. Three months' property taxes, totalling $450, have accrued. This additional amount of
property taxes expense has not been recorded.
i. One month's interest on the note payable, $600, has accrued but is unrecorded.
j. The Spa has provided service to a customer for a package of $1000 but not yet paid and
recorded.
Requirement 2: Prepare the new adjusting trial balance

Exercise 3:
Requirement 1:
In the blank space beside each adjusting entry, enter the letter of the explanation A through
F that most closely describes the entry.
A. To record this period’s depreciation expense.
B. To record accrued salaries expense.
C. To record this period’s use of a prepaid expense.
D. To record accrued interest revenue.
E. To record accrued interest expense.
F. To record the earning of previously unearned income.
[There are four types of adjusting entries: prepaid expenses (PE), unearned revenues (UR),
accrued expenses (AE), or accrued revenues (AR).]

Requirement 2: Adjusting entries affect at least one balance sheet account and at least one
income statement account. For the following entries, identify the account to be debited and
the account to be credited. Indicate which of the accounts is the income statement account
and which is the balance sheet account.