40 Important Adjusting Entries [With PDF]

In this article, we’ll go over 40 important adjusting entries that will help you understand them better.

Before we start, please read the following article: Adjusting entries-Definition, Examples, Types, Necessity, etc. 

It will help you understand how to make adjusting entries for various transactions and will clear up any confusion you may have about them.

So let’s get started.

Adjusting Entries for Business Transactions

The 40 important adjusting entries are as follows:

1. Adjusting entries for outstanding or accrued expenses:

a. For outstanding or accrued salary expenses.

Salary Expenses A/C———-Dr.

Salaries Payable A/C—-Cr.

b. For outstanding or accrued rent expenses:

Rent Expenses A/C———-Dr.

      Rent Payable A/C——-Cr.

c. For outstanding or accrued payroll expenses:

Payroll Expenses A/C——–Dr.

     Payroll Payable A/C——Cr.

2. Adjusting entries for prepaid expenses or prepayments:

I. Prepaid expenses are initially recorded as assets have been used:

a. Adjusting entry for prepaid rent (expired portion)

Rent Expenses A/C ——- Dr.

         Prepaid Rent A/C—-Cr.

b. Adjusting entry for prepaid insurance (expired portion)

Insurance Expenses A/C—Dr.

     Prepaid Insurance A/C–Cr.

c. Adjusting entry for prepaid general expenses (expired portion)

General Expenses A/C————-Dr.

    Prepaid Gen. Expenses A/C—Cr.

II. Prepaid expenses are initially recorded as expenses that have not been used:

a. For insurance expenses

Prepaid Insurance A/C———Dr.

    Insurance Expenses A/C—-Cr.

b. For rent expenses

Prepaid Rent A/C————Dr.

   Rent Expenses A/C——-Cr.

3. Adjusting entry for supplies

Supplies are initially treated as assets.

a. Supplies (used portion)

Supplies expense A/C——Dr.

        Supplies A/C————Cr.

b. Office Supplies (used portion)

Off. Supplies Expenses A/C—-Dr.

        Office Supplies A/C———Cr.

4. Adjusting entries for unearned revenues:

  1. Unearned revenues are initially recorded as liabilities but are now recognized as revenue:

a. Adjusting entry for unearned service revenue (service performed)

Unearned Service Revenue A/C –Dr.

      Service Revenue A/C————Cr.

b. Adjusting entry for unearned rent revenue (expired portion)

Unearned Rent Revenue A/C—-Dr.

     Rent Revenue A/C ————–Cr.

c. Adjusting entry for unearned other revenue (expired portion)

Unearned Other Revenue A/C —-Dr.

     Other Revenue A/C —————Cr.

  1. Unearned Revenues initially recorded as revenue are still unearned:

a. For service revenue

Service Revenue A/C ——————–Dr.

   Unearned Service Revenue A/C –Cr.

b. For rent revenue

Rent Revenue A/C ——————–Dr.

   Unearned Rent Revenue A/C —Cr.

c. For other revenue

Other Revenue A/C ——————–Dr.

   Unearned Other Revenue A/C —-Cr.

5. Adjusting entries for accrued revenues

a. Adjusting entry for accrued service revenue:

Accounts Receivable A/C——Dr.

      Service Revenue A/C——-Cr.

b. Adjusting entry for accrued interest revenue

Interest Receivable A/C ——–Dr.

           Interest Revenue A/C—Cr.

c. Adjusting entry for accrued rent revenue:

Rent Receivable A/C——Dr.

     Rent Revenue A/C—–Cr.

6. Adjusting entry for allowance for un-collectible/doubtful accounts

a. Write off method

Bad Debts Expenses A/C——- Dr.

     Account Receivables A/C—-Cr.

b. Allowance method

Bad Debts Expenses A/C—– Dr.

Allowance for Doubtful A/C–Cr.

c. Written off allowance for doubtful account

Allowance for doubtful A/C—-Dr.

      Account Receivables A/C—Cr.

7. Adjusting entry for bad debts recovered

 i. Account Receivables A/C——- Dr.

       Allowance for Doubtful A/C–Cr.

ii. Cash A/C—————————— Dr.

         Account Receivables A/C—-Cr.

8. Adjusting entry for depreciation of an asset

a. Depreciation on equipment

Depreciation Expenses A/C——————- Dr.

       Accumulated Dep.–Equipment A/C–Cr.

b. Depreciation on Furniture

Depreciation Expenses A/C—————– Dr.

        Accumulated dep.-Furniture A/C —Cr.

9. Adjusting entry for deposited cheque dishonored

Account Receivables A/C— Dr.

     Bank A/C——————— Cr.

10. Adjusting entry for interest on capital

Interest Expenses A/C—- Dr.

     Capital A/C ————— Cr.

11. Adjusting entry for interest on drawing

Capital/Drawing A/C ———– Dr.

           Interest Income A/C—-Cr.

12. Adjusting entry for ending inventory (perpetual inventory system)

(a) If the actual value is higher than the book value, then the entry for the difference will be

Inventory A/C —————– Dr.

  Cost of goods sold A/C —Cr.

(b) If the actual value is less than the book value, then the entry for the difference will be

Cost of goods sold A/C —Dr.

  Inventory A/C ————- Cr.

13. Adjusting entry for supplies included in closing stock.

a. Closing Stock  A/C—————- Dr.

          Cost of Goods Sold  A/C — Cr.

b. Supplies A/C———————Dr.

           Supplies Expense A/C—Cr.

14. Adjusting entry for unrecorded purchase

Purchase A/C ——————Dr.

Account Payables A/C—Cr.

15. Adjusting entry for unrecorded sales

Account Receivables A/C—-Dr.

    Sales A/C ——————— Cr.

16. Adjusting entry for goods distributed as a sample

Advertising Expenses A/C————–Dr.

   Cost of goods Sold/Purchase A/C-Cr.

17. Adjusting entry for goods sold without profit

Sales A/C —————- Dr.

Purchase A/C ——- Cr.

18. Adjusting entry for un-recorded purchase of the machine

Machinery A/C —————- Dr.

     Accounts payable A/C—Cr.

19. Adjusting entry for goods sold but not delivered

No. Entry

20. Adjusting entry for income tax provision

Income tax expense A/C—- Dr.

    Income tax payable A/C–Cr.

21. Adjusting entry for goods sold but not delivered and included in ending inventory

Income summary A/C—— Dr.

   Ending inventory A/C—- Cr.

22. Adjusting entry for installation of machinery included in wages

Machinery A/C ————— Dr.

     Wages expense A/C—Cr.

23. Adjusting entry for repairs expense included in machinery

Repair Expenses A/C—- Dr.

   Machinery A/C———- Cr.

24. Adjusting entry for set off the account receivable against accounts payable

Account Payables A/C———- Dr.

Account Receivables A/C–Cr.

25. Adjusting entry for service provided but not billed.

Accounts Receivable A/C— Dr.

  Service Revenue A/C—— Cr.

26. Adjusting entry for accrued interest on investment

Interest Receivable A/C—–Dr.

  Interest Revenue A/C——Cr.

27. Adjusting entry for accrued Interest on loan or mortgage or notes payable

Interest Expenses A/C—-Dr.

  Interest Payable A/C—–Cr.

28. Adjusting entry for discount or allowance for accounts Receivable

Discount Expenses A/C ——– Dr.

    Accounts Receivable A/C—Cr.

29. Adjusting entry for interest earned but not received

Interest Receivable A/C ——– Dr.

     Interest Revenue A/C——- Cr.

30. Adjusting entries for cash paid in by the proprietor, including in sales.

Sales A/C ————– Dr.

  Capital A/C ——– Cr.

31. Adjusting entry for goods destroyed by fire and the insurance company admitted the claim partially.

Insurance Claim Receivable A/C– Dr.

Loss by fire A/C————————- Dr.

  Cost of Goods Sold A/C———- Cr.

32. Adjusting entries for goods sent on a sale or return basis, the confirmation has not yet been received.

a. Sales A/C ———————–Dr.

     Account Receivables A/C–Cr.

 b. Merchandise Inventory A/C—Dr.

    Cost of goods sold A/C——— Cr.

33. Adjusting entry for bank interest on deposit

Bank A/C——————– Dr.

     Interest Income A/C – Cr.

34. Adjusting entry for Deferred Advertisement

Deferred advertisement A/C ———- Dr.

          Advertisement Expenses A/C—Cr.

35. Adjusting entry for Discount on account receivable

Discount Expenses A/C———————————————–Dr.

    Allowance for a discount on account receivable A/C — Cr.

36. Adjusting entry for goodwill written off

Amortization A/C —– Dr.

     Goodwill A/C ——- Cr.

37. Adjusting entry for proposed dividend

Dividend expenses A/C ——- Dr.

       Dividend payable A/C—–Cr.

38. Adjusting entry for Vat included in Purchase

VAT Current A/C—–Dr.

  Purchase A/C——Cr.

39. Adjusting entry for Office supplies included in the Beginning inventory

a. Income Summary A/C—Dr.

         Opening Stock A/C—Cr.

b. Office Supplies A/C———-Dr.

     Supplies Expense A/C—Cr.

40. Adjusting entry for valueless cheque included in Cash

Mislenous Loss A/C——Dr.

   Cash A/C —————- Cr.

I hope you now have a clear understanding of how to make adjusting entries for various transactions after reading this article.

Please let us know if you need the adjusting entry for any other transactions not listed above by leaving a comment below.

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