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Lesson 8, Topic 1

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🎥+✏️Adjusting Accounting Entries BC🟢

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Joy Jennette 27 January 2024

For the prepaid rent expense, that means the date that we’re trying to record the entry would be October 31 since we are only recording half? I’m confused as to why it would not be 1,500 if we’re trying to record for Dec 31.

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1. Deleted User 27 January 2024
  
  Hello Joy,
  
  Can you please mention which timeframe you are referring to ?
  
  Farhat Lectures support team
  
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Terris Muhammad 20 March 2024

Very helpful review. So glad I reviewed this material. I feel much more confident now in knowing the material covered here.

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Daman Molri 9 April 2024

Hi Sir
I am facing some issues with the quality of the video, even with the higher resolution, the text is a bit difficult to read.
If I open the ppt along with the video not able to move pages simultaneously
can you please help ?

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1. Deleted User 13 April 2024
  
  Hello Daman,
  
  We are checking the video and will get back to you within 48 hours.
  
  Farhat Lectures Support Team
  
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2. Deleted User 13 April 2024
  
  Hello Daman,
  
  As of now, the video quality is acceptable from our end.
  For your second request , please try to search for a solution on the web.
  
  Farhat Lectures Support Team
  
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Brian Wang 20 May 2024

Was this $12,000 business generated in early October? So you carry forward half a month’s expenses after half a month?

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1. Deleted User 25 May 2024
  
  Hello Brian,
  
  The $12,000 relates to prepaid rent (1 year),the adjustment relates to recognition of half a month worth of rent expense by debiting rent expense and crediting prepaid rent since we are working on period end 31 October 2024.
  
  Hope this makes sense !
  
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  1. Brian Wang 26 May 2024
    
    Do we make adjustments on the 15th of each month according to U.S. GAAP?
    
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    1. Maroun, CPA 1 June 2024
      
      Hello Brian,
      
      The adjustment is specific to the details of the example.
      At around 5:50, Professor Farhat mentioned that $12,000 was prepaid on October 15 for one year of rent. The rent expense incurred for October covers the period from October 15 to October 31, which is approximately half a month. Therefore, the $12,000 is first divided by 12 months to determine the monthly rent expense, and then by 50% because only half a month of rent is applicable for October.
      
      I hope this helps! If you have any further questions, feel free to ask!
      
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Derrick Chase 25 June 2024

Hello,

I have a question on time stamp 3:02. My question pertains to prepaid expenses and the building and equipment. I thought that the building and equipment would go on the balance sheet as an asset and not as an expense. I am sort of confused as to how the building and equipment expense would come about. Can you please elaborate on. this and state what the journal entry would be or the transactions that would occur when purchasing a building or equipment?

Thank you,

Derrick

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1. Maroun, CPA 27 June 2024
  
  Hello Derrick,
  
  When purchasing a building or equipment, these are considered long-term assets and are recorded on the balance sheet, not as an expense. What Professor Farhat means is that the fixed assets are treated like prepaid expenses. Although they are paid for, they will affect the income statement when they are used, much like prepaid expenses which affect the income statement when they are incurred.
  
  Here’s how the journal entries would look (although I am sure you already know them):
  When you purchase a building or equipment, you record the asset at its purchase cost.
  Journal Entry:
  Debit Building/Equipment [Purchase Cost]
  Credit Cash/Accounts Payable [Purchase Cost]
  
  Depreciation Expense:
  Over time, the building or equipment is depreciated. Depreciation allocates the cost of the asset over its useful life. This is the adjustment that Professor Farhat is discussing, specifically around minute 7.
  Journal Entry (for one period):
  Debit Depreciation Expense [Depreciation Amount]
  Credit Accumulated Depreciation [Depreciation Amount]
  
  This way, the expense is recognized gradually, matching the asset’s usage over time, rather than all at once.
  
  I hope this helps!
  
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Grace 28 October 2024

How can supplies be a prepaid?

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1. Maroun, CPA 30 October 2024
  
  Hello My Duyen,
  
  In this scenario, supplies were originally recorded as an asset, reflecting the concept of prepaid expenses. The idea is that supplies provide future economic benefits, so they are initially listed as an asset on the balance sheet until they are used. Once consumed, their cost is transferred to an expense on the income statement.
  
  I hope this helps!
  
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  1. Grace 30 October 2024
    
    Thank you. Is there any other accounts similarly? Do you have list of all the accounts that are like supplies besides rent that are considered to be a prepaid and go on the balance sheet?
    
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Waleed Althunayyan 13 January 2025

why in the ajdusted balance specifically “equipment” still worth 9000

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1. Maroun, CPA 16 January 2025
  
  Hello Waleed,
  
  The equipment balance remains at $9,000 in the adjusted balance because the adjustment for depreciation is recorded in a separate contra-asset account called Accumulated Depreciation, not directly in the Equipment account. The Equipment account reflects the historical cost of the asset, which does not change unless there is a purchase, sale, or disposal of the equipment. The depreciation adjustment reduces the net book value of the equipment but does not alter its original recorded cost.
  
  I hope this helps!
  
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Joseph Aiello 1 July 2025

14:45

for the journal entry we are crediting “Consulting Revenues” but the “revenue” T account has a debt of 1000. is that supposed to be a credit rather than a debit?

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1. Maroun, CPA 3 July 2025
  
  Hello Joseph,
  
  The $1,000 should be on the credit side of the T account.
  I’ve updated the video. Thank you for pointing this out!
  
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jaeyoon ahn 10 July 2025

I cannot download the ppt file. Please check

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1. Maroun, CPA 12 July 2025
  
  Hello Jaeyoon,
  
  I’ve updated the PPT.
  Please try again and let me know if the issue persists.
  
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  1. jaeyoon ahn 12 July 2025
    
    Works! thanks
    
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    1. Maroun, CPA 14 July 2025
      
      You’re most welcome!
      
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