FIN621 Assignment # 1 Solution
Thursday, October 28, 2010 Posted In Fin Edit ThisSolution:
Assignment No. 01
FIN-621 Financial Statement Analysis
Adjustment Entry (1)
Accrual Entry of Salary Expense,
Date | Description | L/F | Debit Amount (Rs.) | Credit Amount (Rs.) |
Salaries Expense Salary Payable (Salary expense M/O Dec-09 Adjusted) | 660 | 660 |
Explanation:
Salary month of Dec-09 accrued but not yet paid. So we make an accrual entry of salary expense for charge this expense in Dec-09 trial balance.
Adjustment Entry (2)
Adjustment Entry of office supply,
Date | Description | L/F | Debit Amount (Rs.) | Credit Amount (Rs.) |
Office Supply Expense Office Supply Prepaid (Office Supply expense M/O Dec-09 Adjusted) | 432 | 432 |
Explanation:
Office supply purchase for more then one financial period. We do not charge this expense in current accounting period because we use its benefit long time. So with this entry we charge only such an amount as uses of office supply.
Adjustment Entry (3)
Depreciation charge on Machinery,
Date | Description | L/F | Debit Amount (Rs.) | Credit Amount (Rs.) |
Depreciation Machinery Accumulated depreciation machinery (Depreciation on Machinery m/o Dec-09 adjusted) | 660 | 660 |
Explanation:
Depreciation is an expense who we charge on relevant fixed asset. Because fixed assets like Building, machinery, give us a long time benefit so we charge it in our balance sheet in Assets side but as its uses its life decrease. And this decrease in life on fixed asset we charge it as expense in the income statement as the name of depreciation.
Adjustment Entry (4)
Consulting Fees (Income) Receivable,
Date | Description | L/F | Debit Amount (Rs.) | Credit Amount (Rs.) |
Consulting Fees Receivable Consulting Fees Income (Consulting Fees Receivable m/o Dec-09 adjusted) | 1020 | 1020 |
Explanation:
This entry made because we provide services to our customer but still not received payment. So we debit it’s our receivable account who effect in balance sheet in asset side and credit our income account that its increase our net income in income statement. Its increase our assets (Balance Sheet) and also increase our income (Income Statement).
Adjustment Entry (5)
Unearned Consulting Fees,
Date | Description | L/F | Debit Amount (Rs.) | Credit Amount (Rs.) |
Unearned Consulting Fees Consulting Fees Income (Adjust unearned Consulting Fees Account ) | 252 | 252 |
Explanation:
Some time customer give us advance payment but not yet use our services. This advance consulting fees is not our income so we charge it as unearned income account who effect in balance sheet in liability side. But when we give services against this advance income then we charge it by the above mention entry in our income statement. Its decrease liability (Balance Sheet) and increase our income (Income Statement).
The above highlighted columns are the adjustments which cause the trial balance to change..
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