Chapter 3, Problem 3GLP

To determine

Concept introduction:

Steps in Accounting cycle: Accounting cycle is the series of steps of accounting process which processes transactions into financial statements. The steps of accounting cycle are as follows:

1. Collecting transactions and events
2. Recording journal entries for transactions and events
3. Posting the journal entries into ledgers
4. Preparing unadjusted trial balance from ledger balances
5. Recording adjusting entries
6. Posting adjusting entries into ledgers and Preparing adjusted trial balance
7. Preparing financial statements; Income statement, balances sheet, statement of owner’s equity and Cash flow statements.
8. Preparing Closing entries to close temporary accounts.
9. Preparing post closing trial balance
10. Recording reversing journal entries (Optional)

To prepare: The adjusting journal entries for the given transactions and indicate the effect of each adjustment on the net income.