University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

288

Pages:

1
Author:

stud_ice13

a. Adjusting Entry for Accounts Receivable (Services Rendered) 1. Determine the current balance: o Accounts Receivable equals $0 (no services recorded yet). 2. Determine the required balance: o The company has completed services worth $1,000 that are not yet billed. Thus, Accounts Receivable should equal $1,000. 3. Record the adjusting entry: o Debit Accounts Receivable: $1,000 (This increases the asset account to reflect the amount owed by the client.) o Credit Service Revenue: $1,000 (This increases the revenue account to recognize the earned revenue.) Adjusting Entry: bash Debit: Accounts Receivable $1,000 Credit: Service Revenue $1,000 b. Adjusting Entry for Interest Receivable (Interest Earned) 1. Determine the current balance: o Interest Receivable equals $0 (no interest recorded yet). 2. Determine the required balance: o The company has earned $500 in interest that has not been recorded. Thus, Interest Receivable should equal $500. 3. Record the adjusting entry: o Debit Interest Receivable: $500 (This increases the asset account to reflect the interest earned but not yet received.) o Credit Interest Revenue: $500 (This increases the revenue account to recognize the earned interest.) Adjusting Entry: bash Debit: Interest Receivable $500 Credit: Interest Revenue $500