Question 3 25 pts (TCO 4) Explain why adjusting entries are important to the acc

Question

Question 3 25 pts (TCO 4) Explain why adjusting entries are important to the accounting cycle (5 points). Prepare the following adjusting entries: Paul Co beginning balance of the supplies account was $1200. During the month, Paul purchased $ 400 of supplies, and his ending count (at the end of the month) was $800.00 worth of supplies. Prepare the adjusting entry. (10 Points) Paul company purchased a piece of equipment on October 1, 2017 for $ 130,000. The replacement value was $10,000, and the useful life was for 7 years. They depreciated the equipment on the straight line basis of depreciation. Do the depreciation adjusting entry for December 31, 2017. (10 points)

Explanation / Answer

Adjusting entry is necessary because single transaction has effect on more than one accounting period. so we should classify particular period by adjusting entry.

Adjusting entries :

Date accounts & explanation debit credit Supplies expenses a/c 800 Supplies a/c 800 (To record supplies adjusted) Depreciation expenses a/c 4286 Accumlated depreciation a/c 4286 (To record depreciation expenses)

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