Chapter 3:  Adjustments
Adjustments are transactions that are recorded and posted at the end of the accounting period, for
the purpose of recognizing various revenues and expenses.  Adjustments are made necessary
because we are using the accrual system of accounting.  The accrual system of accounting
requires that:    1. we recognize all revenues that have been earned during the period and
2. we recognize all expenses that have been incurred during the period.
JOHNSON CONSULTING
ASSETS   LIABILITIES   OWNER'S EQUITY
Cash   Accounts Payable   Johnson Drawing Johnson Capital
50,000           50,000
not used not used          
for adj. for adj. Allowance for     OPERATIONS    
Accounts Receivable Uncollectible Accounts     Notes Payable   Rent Expense Service Revenue
             
             
   
Prepaid Rent   Interest Payable   Supplies Expense
         
         
   
Supplies   Unearned Revenue   Depreciation Exp.
         
         
Accumulated Depreciation    
Equipment Equipment     Salaries Payable   Salaries Expense
           
           
Accumulated Depreciation    
Buildings Buildings       Interest Expense
         
         
    Uncollectible-Account
    Expense