FABM 2- PERIODIC SYSTEM JOURNAL ENTRIES

FABM 2- ADJUSTING ENTRIES

by RECHELLE RUTH AUSTIN

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OPENING PRAYER

http://youtube.com/watch?v=H7JwJvdSStk

​CLASS RULES

​1. ATTEND THE MEETING 5 MINUTES BEFORE THE CLASS OPENING.

2. MAKE SURE TO HAVE YOUR MODULES AND CALCULATOR.

​3. DO NOT TALK WHILE THE TEACHING IS TALKING. iF YOU HAVE QUESTIONS,CLARIFICATIONS, ISSUES AND CONCERNS JUST CLICK THE RAISE BUTTON ICON.

​4. PREPARE YOUR HEARTS, MIND,BODY AND SOUL .

​5. TURN ON CAMERA ALWAYS

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​PREVIEW

​https://quizizz.com/admin/quiz/5defa0450cfe56001b9d3556/accounting

PROPER DISCUSSION:ADJUSTING ENTRIES

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PURPOSE OF ADJUSTING ENTRIES​

​The purpose of adjusting entries is to match costs against revenues. The expenses incurred during the period, whether paid or not, are matched against the revenue earned for the same period, whether collected or not, for the correct determination of the profit for the period.

​Adjusting entries are recorded at the end of the accounting period.

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REQUIRING ADJUSTING ENTRIESMOST COMMON TRANSACTIONS

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• DEPRECIATION​ OF PROPERTY, PLANT AND EQUIPMENT.

• ​ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS.

• ​ACCRUED AND PREPAID EXPENSES.

• ​ACCRUED AND UNEARNED REVENUES.

• ​OTHER ADJUSTMENTS, LIKE

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  UNUSED OR UNSOLD INVENTORY AT THE END OF THE ACCOUNTING PERIOD.

​Depreciation

- is the decrease in value of a property due to usage, passage of time, action of natural elements, or decay. As it is difficult to measure the actual decrease in value of the property, the accounting of depreciation is done through a systematic basis.

-The cost of a deprecible asset is systematically allocated over its estimated useful life. The estimated scrap value at the end of the life of the asset is not included in the amount expensed over the periods of depreciation.​

​The estimated useful life is the estimated length of time, normally in years, when the property is expected to be used.

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​Straight-line method-the simplest method

Under this method, the depreciation expense is calculated by allocating the depreciable amount equally over the estimated useful life in years of the property. The formula for the computation of depreciation using the straight line method is as follows:

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Depreciation Expense	=	Depreciable value
		Estimated Useful Life

​Straight-line method-the simplest method

The depreciable value of the asset is the difference between its cost and estimated residual value at the end of its useful life. The cost of the asset is the amount paid to purchase the asset, including the incidental costs in bringing the asset to the location and condition intended for its use. The residual value, sometime called scrap or salvage value, is the amount estimated to be recovered at the end of the useful life of the property.

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Exercises: Using the Straight-Line Method of Depreciation​

​Exercise 1.

​A machine was purchased by the company for P120,000. It is expected to be sold as scrap for P20,000 after its estimated useful life of 10 years. Present the journal entry to record the annual depreciation.

​Exercise 2.

A computer equipment was purchased for P65,000. The equipment will be sold for P5,000 after its useful life of 5 years. Present the depreciation table for 5 years.

​Exercise 3.

Compute the depreciation of the following properties and present the journal entry to record the depreciation for one month:

Asset	Cost		Salvage Value	Useful Life (yrs)
Building	P6,400,000		P100,000	20
Machinery	1,500,000		60,000	10
Equipment	480,000		0	4

REFER TO YOUR MODULE PAGES 18-33​