Matakuliah
Tahun
: V0232 – Akuntansi Keuangan Hotel
: 2009
Hospitality Financial Accounting
Week 3
Adjusting the Accounts
4-1 Guidelines to Report Revenue and
Expenses
Time Period Assumption
Economic life of business
can be divided into
artificial time periods
Revenue Recognition
Principle
Revenue recognized in
the accounting period in
which it is earned
Matching Principle
Expenses matched with
revenues in the period
when efforts are expended
to generate revenues
4-2 Depreciation
PREPAYMENT
Cost of
Truck
$15,000
ASSET
2008
1/1/08
Entry:
Truck
Cash
15,000
15,000
ASSET
EXPENSE
2009
12/31/08
Depreciation
Expense
Accumulated
Depreciation
EXPENSE
CONTRA ASSET
2010
12/31/09
12/31/10
5,000
5,000
Depreciation
Expense
Accumulated
Depreciation
5,000
5,000
Depreciation
Expense
Statement Presentation:
Accumulated
Depreciation
Balance Sheet
Asset
Truck
Contra Asset
Less: Accum. Depr.
Book Value
5,000
5,000
$15,000
$15,000
$15,000
5,000
10,000
15,000
$10,000
$ 5,000
$
-0-
4-3 Prepayment Relationships
PREPAYMENTS
Benefits More Than One
Accounting Period
RECORD AS ASSET
Prepaid Insurance
RECORD AS LIABILITY
1,200
Cash
Cash
1,200
Insurance Expense
Prepaid Insurance
(One month expired)
Unearned Rent
Initial
Entry
(Acquired one year policy)
6,000
100
(Received one year’s rent)
Unearned Rent
100
Adjusting
Entry
6,000
Rent Revenue
Benefits Consumed or
Earned in Current Period
(One month earned)
500
500
4-3 Prepayment Relationships
(continued)
Account Effects:
Balance Sheet
Prepaid Insurance
1,200
Unearned Rent
100
500
Bal. 1,100
6,000
Bal. 5,500
Income Statement
Insurance Expense
100
Rent Revenue
500
4-4 Accrual Relationships
ACCRUALS
Expense or Revenue
Not Yet Recorded
RECORD EXPENSE
Salaries Expense
RECORD REVENUE
500
Salaries Payable
Accounts Receivable
500
(Accrued salary owed)
Salaries Payable
Cash
(Paid salaries)
Adjusting
Entry
Service Revenue
500
Subsequent
Entry
1,000
(Accrued revenue for services
provided)
Cash
500
1,000
Accounts Receivable
(Collected account receivable)
1,000
1,000
4-5 Types of Adjusting Entries
Type of Adjustment
Reason for Adjustment
Account Balances Before
Adjusting Entry
1. Prepaid Expenses
(a) Prepaid expenses originally
accounts have been used
Assets Overstated
Expenses Understated
Dr. Expenses
Cr. Assets
2. Unearned Revenues
(b) Unearned revenues initially
accounts have been earned
Liabilities Overstated
Revenues Understated
Dr. Liabilities
Cr. Revenues
3. Accrued Revenues
(c) Revenues earned but not yet
recorded
Assets Understated
Revenues Understated
Dr. Assets
Cr. Revenues
4. Accrued Expenses
(d) Expenses incurred but not yet
recorded
Expenses Understated
Liabilities Understated
Dr. Expenses
Cr. Liabilities
Each adjusting entry affects a balance sheet
account and an income statement account.
4-6 Examples of Adjusting Entries
Instructions:
For each entry indicate the name of the account
debited and the account credited.
Account Debited
Adjusting Entry
1. To record expired rent which
had been prepaid
2. To record supplies used
during the period
3. To record depreciation on
furniture
4. To record unearned revenue
that has been earned
5. To record salary owed but
not paid
6. To record rent earned but
not recorded.
Account Credited
4-6 Examples of Adjusting Entries
(continued)
Answer:
Account
Debited
Account
Credited
1. Rent Expense
Prepaid Rent
2. Supplies Expense
Supplies
3. Depreciation Expense
Accumulated Depreciation
4. Unearned Revenue
Revenue
5. Salary Expense
Salary Payable
6. Rent Receivable
Rent Revenue
4-7 Posting of Adjusting Entries
The following unadjusted accounts and related balances are provided at September 30:
Accounts
$
Supplies…………………………………………
Salary
Unearned
Revenue…………………………………………
Salary
1,200
-0500
15,000
2,100
Depreciation
-0-
Accumulated
3,000
Instructions: Open T-accounts and post the adjusting entries indicated from the
following data:
a)
Supplies on hand, $200.
b)
Revenue earned but not accrued, $900.
c)
Unearned revenue earned by not recorded, $400.
d)
Salary owed to employees, $700.
e)
Depreciation of $200 is recognized.
4-7 Posting of Adjusting Entries
(continued)
Accounts Receivable
Supplies
2,400
(b)
1,000
(a) 1,000
-0-
900
(d) 700
3,300
200
Unearned Revenue
(c)
Salary Payable
Supplies Expense
400
500
100
1,000
1,000
Depreciation Expense
15,000
(b)
900
(c)
400
16,300
Salary Expense
-0(a)
Revenue
700
2,100
(d)
700
2,800
Accumulated Depreciation
-0(e)
200
200
3,000
(e)
200
3,200
4-8 Review Chapter Concepts
Topic Applied
Results
Justification
1. Time Period Assumption
Economic life of business is To provide information to
time periods.
financial statements and tax
2. Revenue Recognition
Revenue is recorded in
Requires adjusting entries.
To record assets or
liabilities and proper
revenue earned.
3. Matching Principle
Record expenses in the
occur. Requires adjusting
To record liabilities or use of
expenses incurred in
4. Accrual Basis Accounting Applies revenue recognition To record revenue when
matching principle, and
expenses when incurred.
assumption.
4-9 Prepayment—Alternative Treatment
PREPAYMENTS
Benefits More Than One
Accounting Period
RECORD AS EXPENSE
Insurance Expense
RECORD AS REVENUE
1,200
Cash
Cash
1,200
(Acquired one year policy)
Prepaid Insurance
Insurance Expense
(Eleven months unexpired)
Initial
Entry
1,100
Rent Revenue
Adjusting
Entry
6,000
(Received one year’s rent)
Rent Revenue
1,100
6,000
Unearned Rent
(Eleven months unearned)
5,500
5,500
4-9 Prepayment—Alternative Treatment
(continued)
Account Effects:
Balance Sheet
Prepaid Insurance
Unearned Rent
1,100
5,500
Income Statement
Insurance Expense
1,200
Bal.
100
1,100
Rent Revenue
5,500
6,000
Bal.
500