Chapter 3, Problem 3.2BE

To determine

Adjustment entries: Adjusting entries are those entries which are made at the end of the year to update the all balances in the financial statements to show the true financial information and to maintain the records according to accrual basis principle.

Accounting rules for journal entries:

• To Increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To Decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

The type and status (before adjustment) of the following accounts:

1. 1. Supplies of $100 are on hand.
2. 2. Services performed but not recorded total $900.
3. 3. Interest of $200 has accumulated on a note payable.
4. 4. Rent collected in advance totaling $650 has been earned.