ADJUSTING ENTRIES Always remember that an asset that is already used will be considered as expense.

For example used supplies, 15000 To record it you must debit expense particularly supplies expense and credit supplies(used portion) Dr. Supplies Expense 15,000 Cr. Supplies (Assets) 15,000

The unused portion is your remaining assets. For an instance you have P30,000 supplies and 15,000 is already used therefore the remaining 15,000 will be the unused portion. Same goes to Prepaid Rent, Prepaid Insurance Depreciation of Property and Equipment a. Use this formula: Record her remaining obligation to her staffs which is payable at the end of the month, P 15,000 AC-SV/UT/12 AC=Acquisition Cost, this is also known as the purchase cost; SV= Salvage Value, it is the estimated amount of the property or equipment after the lapse of useful time UT= it is the estimated time of the equipment or property when it comes to its durability panahon na inaasahan na tatagal o magagamit pa yung kagamitan o ari arian; 12= to see the depreciation expense of every month; Actually there is no money that is being used in depreciation it is just so happen that value of the equipment or property is depreciating bumababa yung presyo habang tumatagal; There is no Land Account in depreciation habang tumatagal mas nagmamahal ang lupa so there is no point to use the depreciation equation for it Fro example Acquisition Cost= 150,000 Salvage Value=0 Useful Time 5 years

AC(150,000)-SV(0)/UT(5Yrs) = 30,000 In order to record the depreciation, debit the depreciation expense and credit accumulated depreciation Depreciation Expense Dr. 30,000

Accumulated Depreciation Cr. 30,000

Now we go to Unearned Revenue Remember when you received an advance payment for your future service. What you do to record is debit Cash credit Unearned revenue, there is no revenue yet because you do not perform the service yet If you already rendered the service which is already paid by your client you make an adjusting entry for it and it goes like this. Debit Unearned Revenue because you already performed your obligation which means your liability should decrease, and credit revenues because you already recognize it as your income or revenue To illustrate more: Received advance payment for future service, 10,000 Dr. Cash Cr. Unearned Revenue Rendered service already paid by your client, 10,000 Dr. Unearned Revenue Cr. Revenue As you can see in the two transactions above if we will cancel out its common Unearned Revenue we will derive rendered service and received cash that is debit cash credit revenues

Another magic: Rendered services no cash received

Dr.Accounts Receivable Cr. Revenue Received cash on account Dr. Cash Cr. Accounts Receivable As you can see after you omit its common Accounts Receivables you will derive selling services on cash that is Debit Cash Credit Revenue Now lets see the magic in expenses account When you received meralco bill but it is not yet due, you must record it as increase in your liability(accrued liability, particularly utility payables) and increase in your expense particularly utility expense (1)Dr. Utility Expense Cr. Utility Payable Now when you paid the said bill. Debit Utility Payable because it decrease your liability and credit cash because you used it for paying the bills (2)Dr. Utility Payable Cr. Cash As you can see when you omit there common which is Utility Payable you can derive paid expense (3)Dr. Utility Expense Cr. Cash Same process with salaries expense,if you want to record your obligation to your employee which will be paid at the end of the month used (1). Only change Utility Expense to Salaries and Wages Expense and Utility Payable to Salaries and Wages Payable. When the end of the month already came use (2) dont forget to change Utility Expense to Salaries and Wages Payable. If you paid cash immediately after you hire your employee used (3) dont forget to change Utility Expense to Salaries and Wages Expense

THE FEAR OF THE LORD IS THE BEGINNING OF WISDOM