Chapter IX

Adjusting and Closing Journal Entries



9.1 Adjusting Journal Entries

At the close of the fiscal year and before the preparation of the preliminary trial balance, the C/M Accountant shall draw a journal voucher to recognize the following adjusting journal entries:

9.1.1 Accruals - are revenues earned but not yet received and recorded, and expenses incurred but not yet paid and recorded.

9.1.2 Prepayments - are expenses paid or revenues received before they are incurred or earned. This includes prepaid expenses and unearned revenues. Prepaid expenses include depreciation and amortization expenses.

9.2 Illustrative Accounting Entries

9.2.1 Accruals

a. Accrued Revenues - Interest Income


Account Title

Dr. Cr.
Accounts Receivable xx
Interest Income

xx

To record interest earned not yet received





b. Accrued Expenses - Service Rendered


Account Title

Dr. Cr.
Salaries and Wages - Regular xx
Accounts Payable

xx

To record expenses incurred but not yet paid





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