Give at least 2 examples of adjusting entries?

Answer 1

I will give two examples but first I will give the original transaction then the "adjusting entry" that would be used.

Prepaid Rent, many businesses that "rent" their buildings prepay for months at a time. Say you pay $5,000 a month for rent and you pay Six Months in Advance. It first goes on the books as follows.

Prepaid Rent (Debit) $30,000

Cash (credit) $30,000

After the first month when the company reconciles their books, they need to show that one month of this rent has been "used up", this is an adjusting entry and is as follows

Rent Expense (debit) $5,000 (we only used one month)

Prepaid Rent (credit) $5,000

This "adjustment" is made monthly.

The second one I will use is

Your company purchased a computer on account. When you purchased the computer on account it became an account payable. You decide to make a payment toward the balance you owe, this will go in as an adjusting entry. The accounts would be

Account Payable (debit)

Cash (credit)

An adjusting entry is just what it's called, an entry to "adjust" an previous entry to it's current or new state. If you never adjusted entries, such as accounts payable, prepaid expense, etc, then your books would be inaccurate.