Adjusting Entries

Are journal entries that are recorded in order to properly reflect the appropriate balances in the various ledger accounts for a specific accounting period. The entries are usually prepared at the end of the accounting period but may be prepared at any time that the accountant considers appropriate.

To adjust expense or income items that have already been recorded:

Example 1 Prepaid Rent

On January 1, 2013, Shehla paid $6,000 in advance for office rent, $500 a month.

 Recording in Journal Entry
2013
Jan. 1 Prepaid Rent .................$6,000
            Cash ......................................$6,000
               To record the payment of office rent in advance

Note: At the end of the month the accountant need to adjust the accrued expenses, which is below.

   Recording the Adjusting Entries
2013
Feb. 1 Rent Expense ..............$500
             Prepaid Rent......................$500
               To record the expense have been incurred