How to adjust Prepaid Expenses in Final Accounts.

How to treat the adjustment "Insurance & Rental" to be charged Respectively" . Please show the answer in Adjusted Trial Balance then from adjusted trial balance to P&L and Balance Sheet.

Book balance is as follows as at 31-12-94
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asked Jun 21, 2016 in Trial Balance, Profit & Loss Account and Balance Sheet by Shaws (19 points) 184 views

1 Answer

0 votes

First of all you must understand the meaning of this adjustment.  Figures given in the Trial Balance are amounts paid during 1994 on account of Rent and Insurance for more than one period.  The amounts given in adjustments are expenses of 1994. 

The difference between the amounts given in Trial Balance and the amounts given in adjustments is to be treated as an asset in the Balance Sheet.  Journal entries for carrying out the adjustments are as follows:

 

answered Jun 22, 2016 by jbsclasses (3,813 points)
Thank you Sir.
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