Quiz 12: Accruals, Deferrals, and the Worksheet
The categories that might require adjustments should be given as under: (a) Inventories (b) Prepaid Expenses
When a specific account receivable is deemed uncollectible it should be written off by debiting Allowance for Doubtful Accounts and crediting Accounts receivable.
At the end of the accounting year the Merchandise Inventory account needs to be updated to show the correct year-end balance, as no entries are made to the Merchandise Inventory account directly during the accounting period. This is done with the help of two adjusting entries. The first entry is made to clear the beginning balance of inventory account and the second one is made to place the ending inventory on the books. The adjusting entry to clear the beginning balance of inventory account should be made as under: The adjusting entry to place the ending inventory on the books should be made as under: