Adjusting Entries
Definition: Period-end accruals and deferrals
Scope:BroadDifficulty:Easy
Period-end accruals and deferrals
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Accrued revenue | ||
| $750 interest earned but not yet received. | ||
| Interest ReceivableAsset+ | $750 | |
| Interest RevenueRevenue+ | $750 | |
| Revenue recognized when earned, not when received. | ||
| 2. Accrued expense | ||
| Employees earned $2,500 not yet paid. | ||
| Wages ExpenseExpense+ | $2,500 | |
| Wages PayableLiability+ | $2,500 | |
| Expense recognized when incurred, not when paid. | ||
| 3. Deferred revenue (unearned) | ||
| $600 of prepaid service has been delivered. | ||
| Unearned RevenueLiability− | $600 | |
| Service RevenueRevenue+ | $600 | |
| Liability converts to revenue as earned. | ||
| 4. Deferred expense (prepaid) | ||
| $500 of prepaid insurance has expired. | ||
| Insurance ExpenseExpense+ | $500 | |
| Prepaid InsuranceAsset− | $500 | |
| Asset converts to expense as benefit is consumed. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Interest ReceivableInterest ReceivableAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$750.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
Interest RevenueInterest RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
Normal bal. ▶
$750.00
Wages ExpenseWages ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$2,500.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$2,500.00
Wages PayableWages PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$2,500.00
Normal bal. ▶
$2,500.00
Unearned RevenueUnearned RevenueLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$600.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$600.00
Service RevenueService RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$600.00
Normal bal. ▶
$600.00
Insurance ExpenseInsurance ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$500.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$500.00
Prepaid InsurancePrepaid InsuranceAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$500.00
$500.00
DurationN/A
External Links
- Adjusting entries — Wikipedia