FA16 - Adjusted Trial Balance
Summary
TLDRThis video script outlines the process of transferring adjusting journal entries into an adjusted trial balance. The presenter demonstrates how to accurately input figures, ensuring debits and credits match, and explains the importance of this step for preparing financial statements. A humorous incident involving a spilled drink adds a personal touch to the tutorial.
Takeaways
- đ The process involves transferring adjusting journal entries into an adjusted trial balance.
- đ» The speaker uses a computer to copy journal entries from part one.
- đ A quick behind-the-scenes moment is shared where a drink accident occurred during filming.
- đ Debit and credit entries are carefully transferred to the adjusted trial balance columns.
- 𧟠The importance of accuracy is emphasized, with a reminder to stop if the totals do not match.
- đ Adjustments are made by adding or subtracting the adjusting amounts from the unadjusted balances.
- đ The adjusted trial balance is used to ensure that debits and credits still balance.
- đ The speaker demonstrates how to calculate the new balances after adjustments.
- đ The final step is to total up all the columns to confirm that the adjusted trial balance is correct.
- đ The adjusted trial balance is crucial for preparing accurate financial statements.
Q & A
What is the purpose of adjusting journal entries?
-Adjusting journal entries are used to update the accounts in the general ledger to reflect the current status of assets, liabilities, revenues, and expenses. This ensures that the financial statements accurately represent the financial position of a company at a specific point in time.
What is an adjusted trial balance?
-An adjusted trial balance is a list of all accounts with their balances after adjusting entries have been posted. It is used to ensure that the total debits equal the total credits, which is a fundamental accounting equation.
Why is it important to ensure that debits and credits are equal in the adjusted trial balance?
-Ensuring that debits and credits are equal is crucial because it confirms that all transactions have been recorded correctly and that there are no errors in the accounting process. This equality is a basic principle of double-entry bookkeeping.
What does the term 'transposing numbers' mean in the context of the script?
-Transposing numbers refers to the mistake of swapping the positions of two digits when entering them, which can lead to incorrect financial records.
Why did the speaker mention the importance of being careful and taking time when transferring numbers?
-The speaker emphasized the importance of being careful and taking time to avoid mistakes such as transposing numbers or incorrectly categorizing debits and credits, which could lead to an imbalance in the adjusted trial balance.
What is the significance of the number $4,700 mentioned in the script?
-The number $4,700 represents the debit balance for Supplies Expense and the credit balance for Supplies, indicating the cost of supplies used during the period.
How does the speaker handle the situation where they have to add an additional credit to an existing credit in the trial balance?
-The speaker plans to add the additional credit of $4,000 to the existing credit of $10,000 in the Security Revenue cell, acknowledging that they will have two credits to account for.
What does the speaker mean by 'the big side gets the balance'?
-The speaker is referring to the practice of taking the larger of two amounts (debit or credit) and using that to determine the final balance for an account in the adjusted trial balance.
Why is it necessary to add the unadjusted and adjusted balances together for certain accounts?
-It is necessary to add the unadjusted and adjusted balances together for certain accounts to reflect the true financial position of the company, taking into account any changes that occurred during the accounting period.
What is the final step the speaker mentions before preparing financial statements?
-The final step mentioned is totaling up both the debit and credit columns in the adjusted trial balance to ensure they match, which indicates that the financial statements will be accurate.
Why did the speaker mention the date June 30th in relation to the supplies count?
-The speaker mentioned June 30th because it is the end of the accounting period, and the supplies count of $300 reflects the physical count of supplies on hand at that date, which should match the accounting records.
Outlines
đ Adjusting Journal Entries to Adjusted Trial Balance
The speaker begins by discussing the completion of adjusting journal entries and the process of transferring these entries into an adjusted trial balance. They mention the ease of using a computer to copy journal entries and the importance of accuracy. The speaker humorously shares a personal mishap where a drink exploded, causing a mess. Despite this, they continue with the task of entering numbers from the journal entries into the adjusted trial balance, ensuring debits and credits are correctly matched. They provide a step-by-step guide on how to fill in the trial balance, including how to handle adjustments such as supplies expense, insurance expense, and depreciation. The speaker emphasizes the need to double-check the totals to ensure they match, which is crucial for the accuracy of financial statements.
đ Finalizing the Adjusted Trial Balance
In the second paragraph, the speaker continues the process of preparing the adjusted trial balance. They explain how to calculate the balances for various accounts by subtracting the adjustment amounts from the unadjusted balances, ensuring the correct side of the ledger is credited or debited. The speaker provides specific examples, such as calculating the new balance for supplies and prepaid insurance. They also mention the importance of ensuring the totals on both sides of the trial balance match, which is a sign of correct data entry. The speaker concludes by stating that with the adjusted trial balance complete, they are ready to move on to preparing financial statements in the next video.
Mindmap
Keywords
đĄAdjusting Journal Entries
đĄAdjusted Trial Balance
đĄDebit
đĄCredit
đĄSupplies Expense
đĄPrepaid Insurance
đĄDepreciation Expense
đĄInterest Expense
đĄUnearned Revenue
đĄAccumulated Depreciation
đĄRetained Earnings
Highlights
Completing adjusting journal entries and moving on to the adjusted trial balance.
Efficiently transferring journal entries from part one to the adjusted trial balance on a computer.
The importance of careful and meticulous entry of numbers into the adjusted trial balance.
Incorporating debits and credits for supplies expense and supplies asset accounts.
Recording insurance expense and prepaid insurance with accurate debits and credits.
Handling depreciation expense and accumulated depreciation for computers correctly.
Managing interest expense and interest payable with precision.
Adjusting unearned security revenue with attention to detail.
Ensuring the balance of debits and credits in the adjusted trial balance matches.
The process of adding unadjusted and adjusted figures to derive the final balances.
Verifying the balance of supplies on hand with the accounting records.
Calculating the balance for prepaid insurance after adjustments.
Confirming the accuracy of the adjusted trial balance by matching debits and credits.
Preparing for financial statements with a correctly adjusted trial balance.
The significance of the adjusted trial balance in ensuring the accuracy of financial statements.
Looking ahead to preparing financial statements in the next video.
Transcripts
oK we've just completed our adjusting
journal entries it's time to move on and
put those adjusting journal entries into
our adjusted trial balance
I've removed everything just it's easy
enough on a computer I've just copied up
all of my journal entries from part one
and we're just gonna transfer those
numbers into the adjusted trial balance
column I just want to give you a quick
look behind the curtain here when I
finish a video and I start the next one
I just start right away I just go okay
stop
start and the reason I stopped is if I
make a mistake or something like that
but I always take a drink in between and
if you notice something let's see how do
I go full screen that's it that's my
full screen a coke just exploded all
over my shirts so if you're noticing I
look a little bit off or you're seeing
the stain that's what happened I was
just taking a drink and I don't know
what happened it just went everywhere
all over my computer all over my shirt
so hopefully we all can cope with that
okay
so our first job here and preparing our
adjusted trial balance is literally just
to write these numbers in here literally
I'm trying not to say that word anymore
debit supplies expense credit supplies
so I'm going to literally find the word
supplies expense there it is and under
the debit side I write $4,700
I credit supplies and supplies is under
assets there it is 4700 debit insurance
expense credit prepaid insurance 9333 so
I find my insurance expense somewhere in
the expenses there it is nine three
three three and I credit prepaid
insurance nine three three three so a
little bit painstaking you just got to
be careful take your time here
debit depreciation expense 21400 credit
accumulated depreciation Computers 21400
debit interest expense credit interest
payable twelve fifty there's my interest
expense
there's my interest payable oops almost
at twenty one fifth
the good way to mess up a problem just
transpose two numbers debit unearned
Security revenue credit Security revenue
10,000 debit unearned Security revenue
10,000 now I know and we've seen this
that when we did our journal entries we
actually credit security revenue twice
we credited here and then in journal
entry t so I either gonna make room in
the cell for it or just know that okay I
got 10,000 credit and a four thousand
credit so when I go to my security
revenue cell on this spreadsheet or
whatever you want to call it I can just
put 10,000 and I'm gonna squeeze it over
to the left cuz I know I got another
4,000 coming that I'm gonna add in in
just a minute so that's what I'll do
here
David salaries expense credit salaries
payable 1,500 whose expense 1500
salaries payable 1500 debe de our credit
security revenue 4000 there's my AR 4000
my security revenue I just add in 4,000
if I just written 14,000 in that cell
that's totally fine okay so we've done
the first part here we just have to add
up both columns and make sure things
work four thousand plus ten thousand
plus fifteen hundred plus twelve fifty
plus twenty one thousand four hundred
plus forty seven hundred plus 93 33 five
two one eight three five two one eight
three double underline there and let's
add up the other side forty-seven
hundred plus 93 plus 21 4 plus 1500 plus
twelve fifty plus ten thousand plus four
thousand so I had fourteen thousand five
two one eight three my two sides do
indeed match that's good news if they
didn't match I would stop here because
of course all my journal entries the
debits equal the credits and this is
just try
from the journal entry so I would have
transferred something wrong maybe I put
something in the debit side that should
have been a credit or vice-versa
or maybe I transposed a number but this
has to add up and if it doesn't add up
stop like stop you've made a mistake
okay
moving over to the adjusted trial
balance now with this row we just add
our unadjusted plus our adjustments so
cash 38 grand debit there's no
adjustment so it ends as a 38 grand
debit accounts receivable 12,000 and I
debit that 4,000 so if I've to debits
add them together 12 plus 4 is 16 with
supplies I've got a debit of five and I
adjust a credit of 4,700 so I take the
big one the five minus the smaller one
4,700 cuz I got a debit and a credit 5 -
4,700 is 300 the big side gets the
balance and that number is familiar to
me if we look down at the problem you
can see a count of supplies reals 300
were on hand on June 30th well guess
what today is June 30th and our
accounting records show $300 of supplies
as they should so that's good news
prepaid insurance 28,000 and 9333 I got
a debit of 28 a crediting to have to use
the calculator for this 28,000 debit -
9333 the big one - the small one I get
18 667 on the debit side here 18 667
computers 214,000 there it is ad
computers 46 plus 21 is 67 thousand four
hundred accounts payable eight thousand
it remains a credit salaries payable
credit of 1500 interest payable a credit
of 1250 honor in Security revenue it's a
credit of 15 a debit of 10 the big side
is the credits of 15 minus 10 is 5 and
the credit side gets it the credit side
was the bigger the two this one soon
screw up sometimes they go 15 minus 10
and they get credit of 25 somehow or
they get some funny numbers here for
whatever reason credit uh no
payable 30,000 it was unadjusted common
shares unadjusted retained earnings
unadjusted dividends unadjusted security
revenue 45 credit and 14 is our
adjustments credit so 40 85 and 14 is
$4.99 credit 320 debit and 1500 debit is
321 oops I'm in the wrong column there
321 500 debit interest expense 1250
debit depreciation expense
21400 debit 4700 debit for supplies
$17,000 for repair expense 9333 for
insurance expense 60,000 for rent
expense and 7000 for income tax expense
and at that point we are ready to rock
here let's total everything up so
totaling the left side 38 thousand plus
16 thousand plus 300 plus 18 6 6 7 plus
2 1400 plus 10,000 plus 3 21 500 plus 12
50 plus 21 4 that's 47 hundred plus 17
thousand plus 93 33 plus 60,000 plus
7000 and I get 739 157 three nine one
five last column here 67 thousand four
hundred plus eight thousand plus 1500
plus twelve fifty plus five thousand
plus thirty thousand plus 40 thousand
plus eighty seven thousand plus 4 9 900
739 one five
see they do match hoof that means when I
go to prepare financial statements my
financial statements are going to work
did technically we should put dollar
signs at the top of each column and
beside the bottom lines on both the
adjustments section and the adjusted
trial balance section but at that point
we have prepared ourselves a very nice
adjusted trial balance in our next video
we're gonna look at the financial
statements stay tuned
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