ADJUSTING ENTRIES

PREPAID EXPENSES

 Prepaid Insurance
 Prepaid Rent

PEb Prepaid Expense at the beginning

P Payments made during the period
E Expense made during the period
PEe Prepaid Expense at the end

Analysis T-account
PREPAID EXPENSE
PEb E
P

PEe

MAIN FORMULA1:

PEb + P – E = PEe
Formula for Payments made during the period2

P = PEe + E – PEb

Formula for Expense made during the period

E = PEb + P - PEe

Formula for Prepaid Expense at the beginning

PEb = PEe + E - P

RECEIVABLES
1
The formula needed to be memorized or you can use the analysis of the T-account.
2
For the derivative formulas, use mathematical transposition.
  Accounts Receivable
 Interest Receivable

ARb Receivable at the beginning

I Income recognized during the period
CR Cash Receipts for the specific income during the period
ARe Receivable at the end

Analysis T-account
RECEIVABLE
ARb CR
I

ARe

MAIN FORMULA3:

ARb + I – CR = ARe
Formula for Income recognized during the period4

I = ARe + CR – ARb

Formula for Cash Receipts for the specific income during the period

CR = ARb + I - ARe

Formula for Receivable at the beginning

ARb = ARe + CR - I

PAYABLES

3
The formula needed to be memorized or you can use the analysis of the T-account.
4
For the derivative formulas, use mathematical transposition.
  Salaries Payable
 Interest Payable

SPb Payables at the beginning

SE Expenses made during the period
P Payments made during the period
SPe Payables at the end

Analysis of T-account
PAYABLES
P SPb
SE

SPe

MAIN FORMULA5:

SPb + SE – P = SPe
Formula for Expenses made during the period 6

SE = SPe + P – SPb

Formula for Payments made during the period

P = SPb + SE - SPe

Formula for Payables at the beginning

SPb = SPe + P – SE

UNEARNED REVENUES

URb Unearned Revenues at the beginning

5
The formula needed to be memorized or you can use the analysis of the T-account.
6
For the derivative formulas, use mathematical transposition.
CR Cash Receipts for revenues during the period
R Revenue recognized during the period
URe Unearned Revenues at the end

Analysis of T-account
PAYABLES
R URb
CR

URe

MAIN FORMULA7:

URb + CR – R = URe
Formula for Cash Receipts during the period 8

CR = URe + R – URb

Formula for Revenue recognized during the period

R = URb + CR - URe

Formula for Unearned Revenues at the beginning

URb = URe + R - CR

7
The formula needed to be memorized or you can use the analysis of the T-account.
8
For the derivative formulas, use mathematical transposition.