untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

ADJUSTING JOURNAL ENTRIES & ADJUSTED TRIAL BALANCE

Monday, September 2^nd 2024

LOs:

1. The students understand the concept of adjusting journal entries and adjusted trial balance.
2. The students can analyze the transactions that should be adjusted for adjusting journal entries.
3. The students can adjust the trial balance based on the adjusted journal entries.

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Adjusting journal entries are made at the end of an accounting period to update the accounts to reflect the true financial position and performance of a company. These adjustments are necessary to ensure that all revenues and expenses are recorded in the appropriate period.

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Purpose of Adjusting Journal Entries:

• Accrued Revenues: Revenues that have been earned but not yet recorded in the books. Example: Interest income earned but not yet received.
• Accrued Expenses: Expenses that have been incurred but not yet recorded in the books. Example: Salaries payable that have been earned by employees but not yet paid.
• Deferred Revenues: Revenues that have been received but not yet earned. Example: Advance rent received for future months.
• Deferred Expenses: Expenses that have been paid but not yet incurred. Example: Prepaid insurance for future periods.
• Depreciation of Fixed Assets: Allocating the cost of fixed assets over their useful life. Example: Depreciation of buildings or equipment.

Adjusting Journal Entry

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

The Process of Making an Adjusting Journal Entries

• Identify Transactions: Identify transactions that require adjustments.
• Analyze Transactions: Analyze the impact of these transactions on the accounts.
• Record Adjusting Entries: Prepare the necessary adjusting journal entries and record them in the general ledger.

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Deferred Expenses

Certain expenses (already paid) are recorded in the books but the goods/services have not yet been utilized. At the end of the accounting period, it is necessary to identify which have been used and which will be deferred to the next period. Deferred expenses are included in assets (current assets).

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• Supplies Inventory: Supplies will become an expense for the company when they are used.
• Deferred Rent: Deferred rent will become an expense for the company as time passes.
• Deferred Insurance: Deferred insurance will become an expense for the company as time passes.

How to record?

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Deferred Revenues

Deferred Revenues refer to payments received by a company for goods or services that have not yet been delivered or performed. Since the revenue is not yet earned, it is recorded as a liability on the balance sheet. As the goods or services are provided over time, the deferred revenue is recognized as earned revenue in the income statement.

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• Cash receipts from clients or customers that are received in advance, but the goods or services have not yet been delivered or provided to the customers.
• Deferred Revenue is included as a liability, which is expected to become revenue for the company as time passes or as the work is completed.

How to record?

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Accrued Expenses

Accrued Expenses are expenses that a company has incurred but has not yet paid. These expenses are recognized in the accounting period in which they occur, even if the payment has not yet been made.

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• Expenses within a company that have been incurred due to services or benefits received by the company but have not yet been paid.
• Accrued Expenses fall under the company's liabilities.

How to record?

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Accrued Revenues

Accrued Revenues are revenues that a company has earned by providing goods or services but has not yet received payment for. These revenues are recognized in the accounting period in which they are earned, even if the cash has not been collected. They are recorded as assets on the balance sheet until payment is received.

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• Revenues that a company has earned by providing services but has not yet received payment for are known as Accrued Revenues.
• These are recorded as current assets on the balance sheet, reflecting the amount the company expects to receive in the future.

How to record?

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Depreciation of Fixed Assets

Depreciation of Fixed Assets refers to the process of allocating the cost of a fixed asset (such as machinery, equipment, or buildings) over its useful life. This allocation reflects the asset's decreasing value due to usage, wear and tear, or obsolescence. Depreciation expense is recorded on the income statement, while accumulated depreciation is recorded on the balance sheet as a contra-asset account.

How to record?

untan.ac.id

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Example:

1. Paid insurance on May 1st for 3 months: May, June, and July, amounting to Rp. 30.
2. On May 1st, a client paid for the building rent for 3 months: May, June, and July, amounting to Rp. 30.
3. The cleaning staff were asked to work overtime on May 20th for office security due to a student demonstration in the area. Their overtime pay is promised to be paid at the beginning of the next month, amounting to Rp. 50.
4. The consulting services related to financial strategy formulation for PT. Kuku Bima Sari have been completed. The payment is promised to be made next month on June 4th, amounting to Rp. 5,000.
5. A laptop purchased on May 6, 2024, is estimated to have a useful life of 2 years. The straight-line method is used to calculate depreciation expense, with a residual value of Rp. 280.

untan.ac.id

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Continued to record on Ledger and create an adjusted trial balance…

untan.ac.id

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Tutor’s info:

Name: Arman Jaya, S.Pd.I., M.M.

Department: Bachelor’s Degree Program of Management

Phone: 0811220878

Mail: arman.jaya@ekonomi.untan.ac.id

IG: @armandjayalisand