Chapter 4, Problem 4.5E

(a)

To determine

Adjusting Entries: Adjusting entries are passed at the end of the accounting period to maintain the accounts on accrual basis. These entries are passed in order to adjust the amounts of incomes and expenses in the accounting period in which they are actually earned and incurred respectively.

Accrual basis of accounting: Under the accrual basis of accounting, the expenses and incomes are recognized and recorded as and when they are actually incurred or earned, rather than when the cash is paid or received.

Adjusted Trial Balance: An adjusted trial balance refers to the final trial balance resulting after posting the adjusting entries at the end of the period.

Financial Statements: Financial Statements are a set of statements consisting of an Income Statement, Statement of Cash Flows, and Balance Sheet prepared to know the financial position of the organization.

Worksheet: A worksheet is the summarized form of accounting information which is made in order to ensure that the accounts are made properly.

To journalize: The adjusting entries for Company M and the Financial Statement Column to which each balance of Trial Balance should be extended.

(b)

To determine

To Indicate: the Financial Statement Column to which each balance of Trial Balance should be extended.