Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date. The first event is recorded as an example. (Do not round intermediate calculations & Round your final answers to nearest whole dollar. Enter any decreases to account balances with a minus sign. Not all cells require input.) a. Paid $5,600 cash in advance on October 1 for a one-year insurance policy. b. Received a $4,400 cash advance for a contract to provide services in the future. The contract required a one-year commitment, starting April 1. c. Purchased $1,600 of supplies on account. At year's end, $215 of supplies remained on hand. d. Paid $10,560 cash in advance on August 1 for a one-year lease on office space. Event/ Adjustment a Adj b annoo b. Adj c. Adj d Cash Total Assets + (5,600) + + + + + + The Accounting Equation Other Assets 5,600 (1.400) Liabilities + + + + + + Stockholders' Equity Common Stock + + + + + + Retained Earnings: (1,400)

FINANCIAL ACCOUNTING
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### Accounting Adjustments and the Accounting Equation

The following information presents independent events that require year-end adjusting entries. This exercise demonstrates how each event affects the accounting equation, assuming a December 31 closing date. The goal is to calculate and round final answers to the nearest whole dollar and to correctly adjust decreases in account balances with a minus sign, if applicable. Not all areas require input.

#### Events:

**a.** Paid $5,600 cash in advance on October 1 for a one-year insurance policy.

**b.** Received a $4,400 cash advance for a contract to provide services in the future. The contract required a one-year commitment, starting April 1.

**c.** Purchased $1,600 of supplies on account. At year’s end, $215 of supplies remained on hand.

**d.** Paid $10,560 cash in advance on August 1 for a one-year lease on office space.

#### The Accounting Equation Table:

The table is divided into the components of the accounting equation:

**- Total Assets (Cash + Other Assets)**  
**- Liabilities**  
**- Stockholders' Equity (Common Stock + Retained Earnings)**

For each event and its adjustments, the table indicates the impacts on the accounting equation components.

##### Breakdown of the Table:

- **Event/Adjustment a:**  
  - Cash decreases by $5,600  
  - Other Assets increase by $5,600  
  - Adjustment at year-end results in Other Assets decreasing by $1,400  
  - Retained Earnings decrease by $1,400

- **Event b:**  
  - Not yet filled in the table

- **Event c:**  
  - Not yet filled in the table
  
- **Event d:**  
  - Not yet filled in the table

Each transaction shows how financial events affect a company's assets, liabilities, and equity before and after necessary adjustments are made, ensuring accurate and updated financial reporting.
Transcribed Image Text:### Accounting Adjustments and the Accounting Equation The following information presents independent events that require year-end adjusting entries. This exercise demonstrates how each event affects the accounting equation, assuming a December 31 closing date. The goal is to calculate and round final answers to the nearest whole dollar and to correctly adjust decreases in account balances with a minus sign, if applicable. Not all areas require input. #### Events: **a.** Paid $5,600 cash in advance on October 1 for a one-year insurance policy. **b.** Received a $4,400 cash advance for a contract to provide services in the future. The contract required a one-year commitment, starting April 1. **c.** Purchased $1,600 of supplies on account. At year’s end, $215 of supplies remained on hand. **d.** Paid $10,560 cash in advance on August 1 for a one-year lease on office space. #### The Accounting Equation Table: The table is divided into the components of the accounting equation: **- Total Assets (Cash + Other Assets)** **- Liabilities** **- Stockholders' Equity (Common Stock + Retained Earnings)** For each event and its adjustments, the table indicates the impacts on the accounting equation components. ##### Breakdown of the Table: - **Event/Adjustment a:** - Cash decreases by $5,600 - Other Assets increase by $5,600 - Adjustment at year-end results in Other Assets decreasing by $1,400 - Retained Earnings decrease by $1,400 - **Event b:** - Not yet filled in the table - **Event c:** - Not yet filled in the table - **Event d:** - Not yet filled in the table Each transaction shows how financial events affect a company's assets, liabilities, and equity before and after necessary adjustments are made, ensuring accurate and updated financial reporting.
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