Help
Required:
Each of the following independent events requires an end-of-period adjustment. Show how each event and its related adjustment
affect the accounting equation. Assume the fiscal year ends December 31. The first event is recorded as an example.
Note: Enter any decreases to account balances with a minus sign.
a. Paid $6,800 cash in advance on April 1 for a one-year insurance policy.
b. Received a $14,220 cash advance for a contract to provide services in the future. The contract required a one-year commitment,
starting September 1.
c. Purchased $2,000 of supplies on account. At year's end, $180 of supplies remained on hand.
d. Paid $5,400 cash in advance on March 1 for a one-year lease on office space.
The Accounting Equation
Event/
Total Assets
Stockholders' Equity
Adjustment
Cash
Other
Assets
Liabilities
Common Stock
Retained
Earnings
a.
(6,800) +
+
6,800 =
(5,100)
a. Adjustment
b.
b. Adjustment
c.
c. Adjustment
d.
d. Adjustment
+