Adjusting Entries Cases Case 1: Accrual of income - Interest income (AJE) Case 6: Depreciation expense

Accruals of income and expenses Account Titles Debit Credit Account Titles Debit Credit
Case 1: Accrual of income - Interest income Interest Receivable xx Depreciation Expensexx
Case 2: Accrual of income - Rent income Interest Income xx Accumulated Depreciation Exp. xx
Case 3: Accrual of expense - Interest expense To accrue interest income To accrue interest income
Case 4: Accrual of expense - Utilities expense
Case 5: Accrual of expense - Salaries expense Case 2: Accrual of income - Rent income (AJE) Case 7: Bad Debts expense
Account Titles Debit Credit Account Titles Debit Credit
Recognition of Depreciation & Bad Debts expense Rent Receivable xx Bad Debt Exp. xx
Case 6: Depreciation expense Rent Income xx Allowance for Bad Debt xx
Case 7: Bad Debts expense To accrue rent income To accrue rent income

Initial Recording of Income and Expense Case 3: Accrual of expense - Interest expense (AJE) Liabiltiy method vs Income method (Inital Entry)
Liabiltiy method vs Income method Account Titles Debit Credit Account Titles Debit Credit Account Titles Debit Credit
Asset method vs Expense method Interest Expense xx Cash 120,000 Cash 120,000
Interest Payable xx Unearned Rent 120,000 Rent Income 120,000
To accrue interest expense To record rent in advance To record rent in advance

Case 4: Accrual of expense - Utilities expense (AJE) Liabiltiy method vs Income method (Adjusting Entry)
Account Titles Debit Credit Account Titles Debit Credit Account Titles Debit Credit
Utilities Expense xx Unearned Rent 90,000 Rent Income 30,000
Utilities Payable xx Rent Income 90,000 Unearned Rent 30,000
To accrue utilities expense To recognize rent in advance To recognize rent in advance

Case 5: Accrual of expense - Salaries expense (AJE) Asset method vs Expense method (Inital Entry)
Account Titles Debit Credit Account Titles Debit Credit Account Titles Debit Credit
Salaries Expense xx Prepaid Insurance 120,000 Insurance Expense 120,000
Salaries Payable xx Cash 120,000 Cash 120,000
To accrue salaries expense To record prepaymanet To record prepayment

Asset method vs Expense method (Adjusting Entry)

Account Titles Debit Credit Account Titles Debit Credit
Insurance Expense 30,000 Prepaid Insurance 90,000
Prepaid Insurance 30,000 Insurance Expense 90,000
To recognize prepayment To recognize prepayment