Question

2. List two adjusting entries for just merchandising businesses that service businesses do not make each period. Identify the debit and credit parts of the entry.

Answer 1

Adjusting entries reflect unrecorded economic activity that has taken place but has not yet been recorded because it is either more convenient to wait until the end of the period to record the activity, or because no source document concerning that activity has yet come to the accountant’s attention.

Cost of goods sold	xxx
Merchandise Inventory		xxx
To adjust inventory to match the physical coun

If a business has earned $000 of revenues, but they are not recorded as of the end of the accounting period, the accrual-type adjusting entry will be as follows:

Accrued Receivables Dr.. $000

Service Revenues CR.. $000