LESSON 16-1
Recording Adjusting
Entries
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
RECORDING ADJUSTING ENTRIES
 General ledger account balances are changed only by posting
journal entries
 Two types of journal entries change general ledger account
balances at the end of a fiscal period:
 Adjusting entries bring general ledger account balances up to date
 Closing entries prepare temporary accounts for the next fiscal period
 Adjusting entries recorded in a work sheet are journalized in a
general journal
 The adjusting entries are entered on a new general journal page.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
3
ADJUSTING ENTRIES RECORDED
FROM A WORK SHEET
3
2
1
4
6
5
CENTURY 21 ACCOUNTING © Thomson/South-Western
7
page 481
1. Heading
2. Date
3. Identify the first
adjustment
4. Account debited
5. Debit
6. Account credited
7. Credit
8. Continue down the
Adjustments columns
LESSON 16-1
4
ADJUSTING ENTRY FOR ALLOWANCE
FOR UNCOLLECTIBLE ACCOUNTS
page 482
The adjusted balance of
Allowance for Uncollectible
Accounts is the amount of the
current accounts receivable
the business expects to
become uncollectible
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
5
ADJUSTING ENTRY FOR
MERCHANDISE INVENTORY
page 482
The adjusted balance of
Merchandise Inventory is the
amount of the Inventory
counted at the end of the fiscal
year.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
6
ADJUSTING ENTRY FOR SUPPLIES—
OFFICE
page 483
• The adjusted balance of
Supplies – Office is the
amount of office supplies on
hand at the end of the year.
• The debit to Supplies Expense
recognizes the amount of
supplies used during the
period
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
7
ADJUSTING ENTRY FOR SUPPLIES—
STORE
page 483
• The adjusted balance of
Supplies – Store is the amount
of store supplies on hand at
the end of the year.
• The debit to Supplies Expense
recognizes the amount of
supplies used during the
period
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
8
ADJUSTING ENTRY FOR
PREPAID INSURANCE
page 484
• The adjusted balance of
Prepaid Insurance is the
amount of insurance not used
yet.
• The debit to Insurance
Expense recognizes the
amount of insurance used
during the period
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
9
ADJUSTING ENTRY FOR
DEPRECIATION—OFFICE EQUIPMENT
page 484
• The adjusted balance of
Accumulated Depreciation is the
cumulative amount of depreciation
expensed over the life of the assets.
• The debit to Depreciation Expense
recognizes the amount of
depreciation expensed during the
period
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1
10
ADJUSTING ENTRY FOR
DEPRECIATION—STORE EQUIPMENT
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 485
LESSON 16-1
11
ADJUSTING ENTRY FOR FEDERAL
INCOME TAXES
page 485
• Posing the extra payment of
Federal Income Tax expense
creates the tax liability for the
remaining tax owed.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 16-1