Accounting Roundup, Essay Example

Adjusting journal entries in accounting is probably the most important factor in determining of financial reports is accurate with reasonable assurance. Anytime an adjustment is made in the accounting cycle, the appropriate adjustment must be made in the journal entry where the accounts are affected. There must always be at minimum, two adjustments to two different accounts. This is because if one account is affected, then it will automatically affect another account or sometimes more. This is why accurate journal entry is important.

The accounting cycle is the process of registration of commercial transactions and the processing of the accounting data to generate useful financial information, i.e. the financial statements including accounts of results, balance sheet, cash flow statement and state of change in the heritage. This is accomplished by following the accounting cycle during each period. The accounting cycle starts with the recording of individual transactions in the books of accounts and ends in the preparation of the financial statements and the closure of the process.

It is important to emphasize that the accounting cycle refers to the process of records that goes from the initial registration of the transactions up to the final financial statements. In addition to registering the explicit transactions as they occur, the accounting cycle includes the settings for implicit transactions

The accounting cycle begins with the analysis of the transactions recorded in the basic documents such as invoices and checks, and ends with the completion of a trial balance post-closure. An example in regard to adjusting common journal entries to consider would be a basic sale. If a sale transaction is made, then revenue is credited and cash is debited. If a new equipment asset is purchased for the company, then equipment will be debited, cash will be credited, and expenses will be debited.

This would leave $400 of remaining unearned revenue for Jasper. In this case, revenue would be credited $2,800 while liabilities would be debited. This is because after earning that revenue, Jasper no longer owes services to the client. This adjusting journal entry leaves $400 left of remaining unearned revenue.

The results of not properly adjusting the journal entries according to this transaction would be unfavorable to Jasper. There would be an imbalance in the Jasper financial reports and a client might receive a service which they are not entitled to. A client might also not receive a service which they paid for. This would tarnish the reputation of Jasper for that client and be unfavorable for business.

1. Salaries and wages should be credited 9,600 while accounts payable is credited the same amount.
2. Tampa University’s accounts payable should be credited 1,800, and expenses debited the same amount.
3. Cash should be debited 106,000 with accounts receivables being credited the same amount.
4. After 15 years of estimated life using the straight-line method, the cart would be depreciated at $12,000 per year.
5. The annual interest rate would be $3,600 over a 12 month period. This would be credited each year to accounts payable.
6. The $7,800 would be debited as an asset to insurance account.
7. This would be recorded as a sale. So, cash is debited $4,500 while revenue is credited $4,500.
8. Accounts payable is credited $19,000 while tax expenses is debited the same amount.

Bibliography

Orrell, Magnus and Jiaojia Tian-Lee. “Accounting Roundup.” 2013.

Weygandt, Jerry, Paul Kimmel and Donald Kieso. Accounting Principles 10th E. Wiley & Sons, 2012.