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Adjusting Journal Entries for Balance Sheet Accounts

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Adjusting Journal Entries for Balance Sheet Accounts

Following are several December 31 account balances of Brookhaven Square, Inc.
prior to the preparation of year-end adjusting journal entries:

Property, Plant & Equipment $1,530,200
Cash 120,600
Unearned Rental Revenue 72,000
Common Stock 30,000
Prepaid Rent 5,400
Land 340,500
Note Payable 50,000
Retained Earnings 770,100

Required:
(1) Of the listed accounts, which ones will likely require year-end adjusting journal entries?

(2) Briefly describe the nature of the adjusting journal entries for the accounts identified.

(3) Why would adjusting entries not be needed for each of the nonaffected accounts?

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Solution Summary

The solution explains the concept of adjusting entries, which accounts need adjustments and which accounts would not need adjusting entries.

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(1) Of the listed accounts, which ones will likely require year-end adjusting journal entries?

The following accounts will likely require year-end adjusting journal entries:

Property, Plant & Equipment
Unearned Rental Revenue
Prepaid Rent
Note Payable

(2) Briefly describe the nature of the adjusting journal entries for the ...

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