Chapter 2, Problem 21E

Exercise 2-21 Adjusting the accounts

Norell Inc. experienced the following accounting events during its 2018 accounting period:

1. Recognized revenue on account.

2. Issued common stock.

3. Paid cash to purchase supplies.

4. Collected a cash advance for services that will be provided during the coming year.

5. Paid a cash dividend to the stockholders.

6. Paid cash for an insurance policy that provides coverage during the next year.

7. Collected cash from accounts receivable.

8. Paid cash for operating expenses.

9. Paid cash to settle an account payable.

10. Paid cash to purchase land.

Required

a. Identify the events that would require a year-end adjusting entry.

b. Are adjusting or closing entries recorded first? Why?