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Accounting

Required

Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date. The first event is recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.)

a.

Paid $7,300 cash in advance on April 1 for a one-year insurance policy.
b.

Received an $14,850 cash advance for a contract to provide services in the future. The contract required a one-year commitment starting September 1.
c.

Purchased $2,250 of supplies on account. At years end, $230 of supplies remained on hand.
d.

Paid $5,700 cash in advance on March 1 for a one-year lease on office space.

The Accounting Equation
Event/ Adjustment Total Assets = Liabilities + Stockholders Equity
Cash + Other Assets Common Stock + Retained Earnings
a. (7,300) + 7,300 = + +
a. Adj. + (5,475) = + + (5,475)
b. + = + +
b. Adj. + = + +
c. + = + +
c. Adj. + = + +
d. + = + +
d. Adj. + = + +

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