Adjusting entries are made to follow the accrual basis of accounting. Adjusting entries are those entries which are made before issuing of financial statements showing accounts of income and expense which are accrued but not paid or received. Cost of goods sold: It the value of the goods which is sold during the year. It the basic cost of the goods without the profit element. It is calculated by adding opening stock and purchases during the year and subtracting the result by closing stock. Goods on consignment : This means the goods that are sent to another party to sell on behalf of the owner and unsold goods are returned in the end. To ensure the proper cut off of the sales and inventory and prepare the adjusting journal entries if items are not properly recorded.

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Chapter 10, Problem 10.30P

To determine

Introduction: Adjusting entries are made to follow the accrual basis of accounting. Adjusting entries are those entries which are made before issuing of financial statements showing accounts of income and expense which are accrued but not paid or received.

Cost of goods sold: It the value of the goods which is sold during the year. It the basic cost of the goods without the profit element. It is calculated by adding opening stock and purchases during the year and subtracting the result by closing stock.

Goods on consignment: This means the goods that are sent to another party to sell on behalf of the owner and unsold goods are returned in the end.

To ensure the proper cut off of the sales and inventory and prepare the adjusting journal entries if items are not properly recorded.

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