[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:59.70,0:01:02.94,Default,,0000,0000,0000,,LECTURER: Ok, hello everyone.
Dialogue: 0,0:01:02.94,0:01:06.16,Default,,0000,0000,0000,,Welcome again to the Accounting\Nand Governance class.
Dialogue: 0,0:01:06.50,0:01:13.78,Default,,0000,0000,0000,,Could anyone please tell me\Nif the volume is ok?
Dialogue: 0,0:01:14.92,0:01:17.63,Default,,0000,0000,0000,,Perfect. Ok, thank you.\NThank you.
Dialogue: 0,0:01:18.64,0:01:24.89,Default,,0000,0000,0000,,So, I hope you have had \Na very good week,
Dialogue: 0,0:01:26.11,0:01:29.75,Default,,0000,0000,0000,,and I hope that you will do well \Nin your first assessable homework
Dialogue: 0,0:01:29.75,0:01:32.97,Default,,0000,0000,0000,,that is in the process of marking
Dialogue: 0,0:01:32.97,0:01:38.61,Default,,0000,0000,0000,,by another lecturer, \Nthat is the person who will mark
Dialogue: 0,0:01:38.61,0:01:41.59,Default,,0000,0000,0000,,all our assessment.
Dialogue: 0,0:01:41.80,0:01:47.74,Default,,0000,0000,0000,,So just be a bit patient,\Nduring this week
Dialogue: 0,0:01:47.74,0:01:53.18,Default,,0000,0000,0000,,we will release the results of the \Nfirst assessable homework.
Dialogue: 0,0:01:53.95,0:01:59.59,Default,,0000,0000,0000,,Now today we will continue \Nwith what we started last week.
Dialogue: 0,0:01:59.59,0:02:04.86,Default,,0000,0000,0000,,Last week what you learnt was\Nhow to record transactions
Dialogue: 0,0:02:04.86,0:02:09.37,Default,,0000,0000,0000,,using debits and credits \Nand preparing the journal entries
Dialogue: 0,0:02:09.37,0:02:12.34,Default,,0000,0000,0000,,and you know that for\Neach journal entry
Dialogue: 0,0:02:12.34,0:02:17.66,Default,,0000,0000,0000,,you need at least two entries, \None debit entry and one credit entry.
Dialogue: 0,0:02:17.85,0:02:19.92,Default,,0000,0000,0000,,it could be more than two,
Dialogue: 0,0:02:19.92,0:02:23.91,Default,,0000,0000,0000,,but normally we have one debit\Nand one credit
Dialogue: 0,0:02:23.91,0:02:27.67,Default,,0000,0000,0000,,and of course the total debit \Nand total credit should be the same,
Dialogue: 0,0:02:27.67,0:02:31.99,Default,,0000,0000,0000,,the same amount in each journal entry.
Dialogue: 0,0:02:32.15,0:02:37.30,Default,,0000,0000,0000,,So what we will go through\Ntoday is
Dialogue: 0,0:02:37.30,0:02:41.94,Default,,0000,0000,0000,,another type of entries\Nwhich is adjusting entries.
Dialogue: 0,0:02:42.46,0:02:47.26,Default,,0000,0000,0000,,I hope you have studied the \Nmaterial that is posted
Dialogue: 0,0:02:47.26,0:02:52.29,Default,,0000,0000,0000,,on the course learning at Griffith,\Nyou have watched the videos
Dialogue: 0,0:02:52.29,0:02:58.33,Default,,0000,0000,0000,,and looked at the PowerPoint too \Nand have of course understanding of this.
Dialogue: 0,0:02:58.33,0:03:05.78,Default,,0000,0000,0000,,But as usual I will explain everything \Nyou need to understand well,
Dialogue: 0,0:03:05.78,0:03:09.85,Default,,0000,0000,0000,,how to deal with these\Ndifferent types of entries
Dialogue: 0,0:03:09.85,0:03:13.64,Default,,0000,0000,0000,,that are the adjusting entries.
Dialogue: 0,0:03:13.64,0:03:16.90,Default,,0000,0000,0000,,The purpose of this session \Nis that you will end the session
Dialogue: 0,0:03:16.90,0:03:23.44,Default,,0000,0000,0000,,with a clear understanding of that,\Nadjusting entries and also closing entries
Dialogue: 0,0:03:23.44,0:03:26.41,Default,,0000,0000,0000,,which is another type of entry.
Dialogue: 0,0:03:26.41,0:03:30.50,Default,,0000,0000,0000,,The journal entries that you\Nlearnt last week
Dialogue: 0,0:03:30.50,0:03:35.97,Default,,0000,0000,0000,,are entries that you prepare \Nfrom transactions
Dialogue: 0,0:03:35.97,0:03:40.36,Default,,0000,0000,0000,,that you have in the business so when \Nthe accountant records these transactions
Dialogue: 0,0:03:40.36,0:03:46.60,Default,,0000,0000,0000,,the accountant receives information\Nthat is mainly through the cash received
Dialogue: 0,0:03:46.60,0:03:51.53,Default,,0000,0000,0000,,and cash paid so they are \Nvery based on the cash.
Dialogue: 0,0:03:51.53,0:03:53.94,Default,,0000,0000,0000,,Cash received and cash paid.
Dialogue: 0,0:03:55.33,0:03:57.99,Default,,0000,0000,0000,,I will answer that Jade
Dialogue: 0,0:04:00.10,0:04:03.23,Default,,0000,0000,0000,,They are mainly related to \Ncash received and cash paid
Dialogue: 0,0:04:03.38,0:04:08.67,Default,,0000,0000,0000,,but sometimes the accountant also receives\Ninformation of invoices
Dialogue: 0,0:04:08.67,0:04:15.52,Default,,0000,0000,0000,,that are sent to customers so they record\Nan income or revenue and purchases
Dialogue: 0,0:04:15.52,0:04:18.47,Default,,0000,0000,0000,,so they record the purchase as well.
Dialogue: 0,0:04:18.47,0:04:25.10,Default,,0000,0000,0000,,So not all are cash journal entries\Nbut most of them I would say yes.
Dialogue: 0,0:04:25.64,0:04:30.27,Default,,0000,0000,0000,,The first difference with adjusting entries\Nis in adjusting entries,
Dialogue: 0,0:04:30.75,0:04:33.49,Default,,0000,0000,0000,,we do not involve cash.
Dialogue: 0,0:04:33.49,0:04:38.86,Default,,0000,0000,0000,,Cash is never involved \Nin an adjusting entry.
Dialogue: 0,0:04:38.86,0:04:43.23,Default,,0000,0000,0000,,So what are these adjusting entries?
Dialogue: 0,0:04:43.23,0:04:48.30,Default,,0000,0000,0000,,And in this I will answer what Jade asked.
Dialogue: 0,0:04:48.30,0:04:52.71,Default,,0000,0000,0000,,Why adjustments are not done each month\Nas a normal activity
Dialogue: 0,0:04:52.71,0:04:56.80,Default,,0000,0000,0000,,then it will not be such \Na big adjustment at the end,
Dialogue: 0,0:04:56.80,0:04:59.41,Default,,0000,0000,0000,,and you are totally correct Jade
Dialogue: 0,0:04:59.89,0:05:02.32,Default,,0000,0000,0000,,But that depends...
Dialogue: 0,0:05:02.32,0:05:07.69,Default,,0000,0000,0000,,it depends on what is \Nour accounting period.
Dialogue: 0,0:05:08.10,0:05:10.30,Default,,0000,0000,0000,,It depends on the company.
Dialogue: 0,0:05:10.30,0:05:13.100,Default,,0000,0000,0000,,The normal accounting period \Nis one year.
Dialogue: 0,0:05:13.100,0:05:17.89,Default,,0000,0000,0000,,If a company does not prepare \Nfinancial statements every month
Dialogue: 0,0:05:17.89,0:05:23.10,Default,,0000,0000,0000,,for example, or every quarter, \Nwell, it will happen what you said.
Dialogue: 0,0:05:23.10,0:05:27.20,Default,,0000,0000,0000,,The adjusting entries are \Nat the end of the year.
Dialogue: 0,0:05:27.20,0:05:29.58,Default,,0000,0000,0000,,But what's happening there \Nin the real world
Dialogue: 0,0:05:29.58,0:05:35.92,Default,,0000,0000,0000,,companies prepare the financial \Nstatement
Dialogue: 0,0:05:35.92,0:05:38.70,Default,,0000,0000,0000,,every quarter or even every month
Dialogue: 0,0:05:38.70,0:05:44.25,Default,,0000,0000,0000,,and in that case if we define the \Naccounting period as one month
Dialogue: 0,0:05:44.25,0:05:49.28,Default,,0000,0000,0000,,that means at the end of the month \Nwe need to prepare the adjusting entries.
Dialogue: 0,0:05:49.28,0:05:55.68,Default,,0000,0000,0000,,The concept of adjusting entries is that\Nwe prepare adjusting entries
Dialogue: 0,0:05:55.68,0:06:00.62,Default,,0000,0000,0000,,at the end of the accounting period,\Nok?
Dialogue: 0,0:06:00.62,0:06:04.80,Default,,0000,0000,0000,,That is the thing.\NAt the end of the accounting period.
Dialogue: 0,0:06:04.80,0:06:08.50,Default,,0000,0000,0000,,If the accounting period is one month\Nwe prepare adjusting entries
Dialogue: 0,0:06:08.50,0:06:09.81,Default,,0000,0000,0000,,at the end of the month.
Dialogue: 0,0:06:09.81,0:06:13.60,Default,,0000,0000,0000,,If the accounting period is the whole year\Nwe prepare the adjusting entries
Dialogue: 0,0:06:13.60,0:06:16.18,Default,,0000,0000,0000,,at the end of the year, ok?
Dialogue: 0,0:06:16.18,0:06:23.46,Default,,0000,0000,0000,,That is one concept that we need to \Nhave in relation to adjusting entries.
Dialogue: 0,0:06:23.46,0:06:30.57,Default,,0000,0000,0000,,The other thing is what we are adjusting\Nbecause the name is adjusting entries?
Dialogue: 0,0:06:30.57,0:06:35.84,Default,,0000,0000,0000,,What we are adjusting with these entries.
Dialogue: 0,0:06:35.84,0:06:41.35,Default,,0000,0000,0000,,We adjust revenues or income \Nand expenses.
Dialogue: 0,0:06:41.35,0:06:46.99,Default,,0000,0000,0000,,That is what we adjust to reflect\Nin the financial statements,
Dialogue: 0,0:06:46.99,0:06:52.11,Default,,0000,0000,0000,,all the income or revenue \Nthat has earned in the period,
Dialogue: 0,0:06:52.11,0:06:59.50,Default,,0000,0000,0000,,and to reflect all the expenses\Nthat have been incurred during the period.
Dialogue: 0,0:06:59.50,0:07:01.93,Default,,0000,0000,0000,,That is what we show with \Nthe adjustment entries.
Dialogue: 0,0:07:01.93,0:07:06.66,Default,,0000,0000,0000,,That's why we cannot do adjustment entries\Nin the middle of the month
Dialogue: 0,0:07:06.66,0:07:08.76,Default,,0000,0000,0000,,or at the beginning of the month,
Dialogue: 0,0:07:08.76,0:07:12.37,Default,,0000,0000,0000,,it's always at the end of the period \Nbecause at the end of the period
Dialogue: 0,0:07:12.37,0:07:16.72,Default,,0000,0000,0000,,we want to have in our \Nfinancial statement
Dialogue: 0,0:07:16.72,0:07:19.65,Default,,0000,0000,0000,,all the income earned in that period
Dialogue: 0,0:07:19.65,0:07:23.54,Default,,0000,0000,0000,,and all the expenses incurred \Nin that period.
Dialogue: 0,0:07:23.54,0:07:28.26,Default,,0000,0000,0000,,So this is the most \Nimportant concept
Dialogue: 0,0:07:28.26,0:07:32.40,Default,,0000,0000,0000,,to start with adjusting entries.
Dialogue: 0,0:07:34.57,0:07:38.100,Default,,0000,0000,0000,,Then as I said some expenses \Nand revenue menu can be recorded exactly,
Dialogue: 0,0:07:38.100,0:07:42.86,Default,,0000,0000,0000,,that's the things, others, \Nsome expenses revenues cannot be recorded
Dialogue: 0,0:07:42.86,0:07:50.59,Default,,0000,0000,0000,,we need to adjust to have \Nall the expenses incurred recorded
Dialogue: 0,0:07:50.59,0:07:53.37,Default,,0000,0000,0000,,and the same for income or revenue.
Dialogue: 0,0:07:53.37,0:07:57.90,Default,,0000,0000,0000,,To align with the business \Nactivity statement,
Dialogue: 0,0:07:57.90,0:08:02.47,Default,,0000,0000,0000,,the business activity statement \Nis a tax concept.
Dialogue: 0,0:08:02.47,0:08:07.25,Default,,0000,0000,0000,,In many cases the tax period is the same\Nas the accounting period
Dialogue: 0,0:08:07.25,0:08:10.57,Default,,0000,0000,0000,,in that case a year but we need \Nto be careful that we do not mix
Dialogue: 0,0:08:10.57,0:08:15.09,Default,,0000,0000,0000,,with the tax concept when we\Nare talking with accounting
Dialogue: 0,0:08:15.09,0:08:18.94,Default,,0000,0000,0000,,because there may be some differences.
Dialogue: 0,0:08:18.94,0:08:24.49,Default,,0000,0000,0000,,Ok, so we will start as usual today \Nwith the lecture
Dialogue: 0,0:08:24.49,0:08:29.13,Default,,0000,0000,0000,,in which I will pose\Nfour multiple choice questions.
Dialogue: 0,0:08:29.13,0:08:33.92,Default,,0000,0000,0000,,You will answer the questions, \Nand this will be a good feedback
Dialogue: 0,0:08:33.92,0:08:38.20,Default,,0000,0000,0000,,for you and for me about \Nthe understanding of some basic concepts
Dialogue: 0,0:08:38.20,0:08:41.47,Default,,0000,0000,0000,,of this topic.
Dialogue: 0,0:08:41.47,0:08:46.56,Default,,0000,0000,0000,,If I see that the distribution of \Nyour answer is not very good
Dialogue: 0,0:08:46.56,0:08:52.33,Default,,0000,0000,0000,,which is a good feedback \Nin the sense that that lets me explain
Dialogue: 0,0:08:52.33,0:08:55.35,Default,,0000,0000,0000,,why this answer is correct \Nor why it's not correct
Dialogue: 0,0:08:55.35,0:08:57.72,Default,,0000,0000,0000,,for your own learning.
Dialogue: 0,0:08:57.72,0:09:02.98,Default,,0000,0000,0000,,We will discuss that and I will use \Nthese questions to explain
Dialogue: 0,0:09:02.98,0:09:07.10,Default,,0000,0000,0000,,probably some of the concepts\Nif they are not clear.
Dialogue: 0,0:09:07.10,0:09:13.94,Default,,0000,0000,0000,,So please feel free as usual to ask \Nany question during the lecture
Dialogue: 0,0:09:13.94,0:09:16.22,Default,,0000,0000,0000,,and then during the workshop.
Dialogue: 0,0:09:16.22,0:09:21.56,Default,,0000,0000,0000,,Last week we talked for more than \Nfour and a half hours
Dialogue: 0,0:09:21.56,0:09:26.23,Default,,0000,0000,0000,,in the whole thing because \Nof the number of questions
Dialogue: 0,0:09:26.23,0:09:31.44,Default,,0000,0000,0000,,but probably today we will be less than \Nthat because the topic is more specific
Dialogue: 0,0:09:31.44,0:09:36.79,Default,,0000,0000,0000,,but I am happy to answer all the questions\Nto explain well,
Dialogue: 0,0:09:36.79,0:09:42.50,Default,,0000,0000,0000,,my main purpose is for you\Nto understand these topics.
Dialogue: 0,0:09:42.50,0:09:46.60,Default,,0000,0000,0000,,That is the main purpose because then\Nyou will be evaluated on this topic
Dialogue: 0,0:09:46.60,0:09:49.65,Default,,0000,0000,0000,,The second assessable homework \Nwill be next week
Dialogue: 0,0:09:49.65,0:09:53.29,Default,,0000,0000,0000,,after the topic four, \Nmodule four.
Dialogue: 0,0:09:53.29,0:09:58.98,Default,,0000,0000,0000,,So that assessable homework two \Nincludes this module,
Dialogue: 0,0:09:58.98,0:10:01.68,Default,,0000,0000,0000,,module three, \Nadjusting and closing entries
Dialogue: 0,0:10:01.68,0:10:03.74,Default,,0000,0000,0000,,and also the module four.
Dialogue: 0,0:10:03.74,0:10:08.63,Default,,0000,0000,0000,,That's why it's very important, \Nif there is anything you do not understand
Dialogue: 0,0:10:08.63,0:10:11.63,Default,,0000,0000,0000,,please ask, ok?
Dialogue: 0,0:10:11.63,0:10:14.91,Default,,0000,0000,0000,,I hope no Jade (INAUDIBLE)
Dialogue: 0,0:10:14.91,0:10:20.20,Default,,0000,0000,0000,,Jade I hope it will not be \Nfour and a half hours.
Dialogue: 0,0:10:21.21,0:10:25.57,Default,,0000,0000,0000,,Ok, for me it's ok.
Dialogue: 0,0:10:25.57,0:10:30.61,Default,,0000,0000,0000,,I have enough energy I think \Nto beat four and a half hours.
Dialogue: 0,0:10:30.61,0:10:35.37,Default,,0000,0000,0000,,I feel sorry for you sometimes but \Nmaybe you're very tired after that time
Dialogue: 0,0:10:35.37,0:10:38.97,Default,,0000,0000,0000,,but we will do the best we can.
Dialogue: 0,0:10:39.26,0:10:44.33,Default,,0000,0000,0000,,Ok, so we will start \Nwith the questions...
Dialogue: 0,0:10:57.92,0:11:01.34,Default,,0000,0000,0000,,Here we have the first question, ok?
Dialogue: 0,0:11:02.18,0:11:04.95,Default,,0000,0000,0000,,Have a look.
Dialogue: 0,0:11:05.94,0:11:12.11,Default,,0000,0000,0000,,The question is when is the $1000\Nconsidered to be earned?
Dialogue: 0,0:11:12.82,0:11:17.46,Default,,0000,0000,0000,,So it's about the day in which this \Nis considered to be earned.
Dialogue: 0,0:11:17.46,0:11:21.31,Default,,0000,0000,0000,,Look at all the dates that you \Nhave there and then define
Dialogue: 0,0:11:21.31,0:11:24.36,Default,,0000,0000,0000,,and you can vote for your answer
Dialogue: 0,0:11:24.36,0:11:29.50,Default,,0000,0000,0000,,When they are earned?\NTake your time.
Dialogue: 0,0:11:31.64,0:11:35.52,Default,,0000,0000,0000,,Pima can't see properly, ok.
Dialogue: 0,0:11:35.87,0:11:39.91,Default,,0000,0000,0000,,Pima, you can zoom,\NI will put a bit bigger.
Dialogue: 0,0:11:42.11,0:11:44.78,Default,,0000,0000,0000,,Maybe that can be...
Dialogue: 0,0:11:53.91,0:11:56.38,Default,,0000,0000,0000,,Ok, good.
Dialogue: 0,0:13:09.42,0:13:12.78,Default,,0000,0000,0000,,Ok, what is the answer?
Dialogue: 0,0:13:12.78,0:13:17.34,Default,,0000,0000,0000,,We have a distribution of answers \Nin the poll
Dialogue: 0,0:13:18.97,0:13:21.14,Default,,0000,0000,0000,,so it's good to explain a bit.
Dialogue: 0,0:13:21.14,0:13:23.80,Default,,0000,0000,0000,,That is the feedback I need,\Nso if there are
Dialogue: 0,0:13:23.80,0:13:26.61,Default,,0000,0000,0000,,a whole distribution\Nof your answers means, yeah.
Dialogue: 0,0:13:26.61,0:13:33.35,Default,,0000,0000,0000,,I need to explain how can we determine\Nwhen the $1000 are earned.
Dialogue: 0,0:13:34.47,0:13:39.41,Default,,0000,0000,0000,,Most of you actually answered correctly\Nbut there are of course,
Dialogue: 0,0:13:39.41,0:13:42.54,Default,,0000,0000,0000,,there are many other different answers.
Dialogue: 0,0:13:42.54,0:13:47.80,Default,,0000,0000,0000,,So this question is about \Nwhen revenue is earned, ok?
Dialogue: 0,0:13:48.50,0:13:51.93,Default,,0000,0000,0000,,That is the question, \Nwe are using accrual accounting.
Dialogue: 0,0:13:51.93,0:13:56.34,Default,,0000,0000,0000,,In accrual accounting revenue is recorded\Nwhen it is earned
Dialogue: 0,0:13:56.34,0:13:59.62,Default,,0000,0000,0000,,not when cash is received,
Dialogue: 0,0:13:59.67,0:14:05.53,Default,,0000,0000,0000,,and expenses when they are incurred\Nnot when they are paid, ok?
Dialogue: 0,0:14:05.53,0:14:12.06,Default,,0000,0000,0000,,So we need to identify from the dates\Nwhen these $1000 are earned.
Dialogue: 0,0:14:12.06,0:14:15.28,Default,,0000,0000,0000,,The dress manufacturer received\Na purchase order for 10 dresses
Dialogue: 0,0:14:15.28,0:14:19.31,Default,,0000,0000,0000,,for a total price of $1000,\N15th November.
Dialogue: 0,0:14:19.31,0:14:23.81,Default,,0000,0000,0000,,On 15th November the manufacturer\Nreceived the order, nothing happened,
Dialogue: 0,0:14:23.81,0:14:26.86,Default,,0000,0000,0000,,so the revenue is not earned, ok?
Dialogue: 0,0:14:26.86,0:14:32.70,Default,,0000,0000,0000,,The 10 dresses were delivered \Non 30th November.
Dialogue: 0,0:14:32.70,0:14:36.75,Default,,0000,0000,0000,,Delivered means that revenue is earned.
Dialogue: 0,0:14:36.75,0:14:38.57,Default,,0000,0000,0000,,When is revenue earned?
Dialogue: 0,0:14:38.57,0:14:41.86,Default,,0000,0000,0000,,When the products are delivered \Nto the customer.
Dialogue: 0,0:14:41.86,0:14:46.93,Default,,0000,0000,0000,,They are passed from the company \Nto the customer.
Dialogue: 0,0:14:46.93,0:14:50.70,Default,,0000,0000,0000,,At that point, revenue is earned.
Dialogue: 0,0:14:50.70,0:14:55.58,Default,,0000,0000,0000,,In the case of services,\Nit's when services are provided.
Dialogue: 0,0:14:56.59,0:15:01.39,Default,,0000,0000,0000,,When the service is provided,\Nservice revenue is earned.
Dialogue: 0,0:15:01.60,0:15:08.39,Default,,0000,0000,0000,,So that is the correct answer, ok?
Dialogue: 0,0:15:08.83,0:15:14.43,Default,,0000,0000,0000,,There is some echo, probably \Nsomebody has the microphone on.
Dialogue: 0,0:15:15.98,0:15:20.22,Default,,0000,0000,0000,,So this is the correct answer,\Nand the other dates,
Dialogue: 0,0:15:20.22,0:15:24.51,Default,,0000,0000,0000,,the customer is sent an invoice \Non 5th December.
Dialogue: 0,0:15:24.51,0:15:29.60,Default,,0000,0000,0000,,No, the producer already delivered it, \Ndoesn't matter that the invoice was sent
Dialogue: 0,0:15:29.60,0:15:33.89,Default,,0000,0000,0000,,after the delivery of the products.
Dialogue: 0,0:15:33.89,0:15:36.98,Default,,0000,0000,0000,,The payment, that means the check \Nis received 10th December.
Dialogue: 0,0:15:36.98,0:15:41.19,Default,,0000,0000,0000,,Again, it's not related with when we \Nreceive the payment
Dialogue: 0,0:15:41.19,0:15:44.90,Default,,0000,0000,0000,,or when we bank the payment.
Dialogue: 0,0:15:44.90,0:15:50.51,Default,,0000,0000,0000,,So, the correct answer is that.\Nany questions?
Dialogue: 0,0:15:50.51,0:15:51.85,Default,,0000,0000,0000,,What is the answer Adash?
Dialogue: 0,0:15:51.85,0:15:55.67,Default,,0000,0000,0000,,I put here, can you see the blue...
Dialogue: 0,0:15:56.42,0:16:02.39,Default,,0000,0000,0000,,I wrote in the screen, \Nthe blue circle.
Dialogue: 0,0:16:02.87,0:16:05.24,Default,,0000,0000,0000,,It doesn't save.
Dialogue: 0,0:16:05.24,0:16:08.79,Default,,0000,0000,0000,,30th November, that is the correct answer.
Dialogue: 0,0:16:09.68,0:16:16.63,Default,,0000,0000,0000,,I'm not sure if... Can you see \Nbecause I drew a blue circle in C
Dialogue: 0,0:16:17.79,0:16:20.63,Default,,0000,0000,0000,,Can you see that?
Dialogue: 0,0:16:20.63,0:16:26.20,Default,,0000,0000,0000,,Ah, it's not a line.\NDouble is in the white space.
Dialogue: 0,0:16:26.20,0:16:32.77,Default,,0000,0000,0000,,Ah, I didn't know that. Ok.\NOk, interesting.
Dialogue: 0,0:16:32.77,0:16:40.40,Default,,0000,0000,0000,,In my screen it's exactly in C\Nbut probably there are differences in this
Dialogue: 0,0:16:44.20,0:16:46.83,Default,,0000,0000,0000,,Probably just zoom each, \Nprobably.
Dialogue: 0,0:16:47.38,0:16:54.60,Default,,0000,0000,0000,,I move my zoom in and out\Nand the circle is in C, it doesn't move.
Dialogue: 0,0:16:55.97,0:16:59.82,Default,,0000,0000,0000,,Ok, we go to the next one.
Dialogue: 0,0:17:04.15,0:17:08.51,Default,,0000,0000,0000,,If a resource has been consumed \Nbut an invoice has not been received
Dialogue: 0,0:17:08.51,0:17:13.46,Default,,0000,0000,0000,,at the end of the accounting period,\Nwhich of this is correct?
Dialogue: 0,0:17:13.55,0:17:21.20,Default,,0000,0000,0000,,I will update...\NIt doesn't move the page.
Dialogue: 0,0:17:42.47,0:17:49.92,Default,,0000,0000,0000,,Ok, if you cannot follow this \NI can change to put...
Dialogue: 0,0:17:50.82,0:17:53.24,Default,,0000,0000,0000,,Yes, I will reset the board.
Dialogue: 0,0:18:55.81,0:19:00.56,Default,,0000,0000,0000,,Ok, so if a resource has been consumed\Nbut an invoice has not been received
Dialogue: 0,0:19:00.57,0:19:05.40,Default,,0000,0000,0000,,at the end of the accounting period,\Nwhat is the situation?
Dialogue: 0,0:19:06.43,0:19:13.66,Default,,0000,0000,0000,,We have some different answers\Nbut most of you are correct.
Dialogue: 0,0:19:14.55,0:19:17.38,Default,,0000,0000,0000,,The correct answer is B.
Dialogue: 0,0:19:19.29,0:19:26.51,Default,,0000,0000,0000,,Ok, B, an adjusting entry should be \Nrecorded to recognize the expense.
Dialogue: 0,0:19:26.51,0:19:32.52,Default,,0000,0000,0000,,Why is this? \NBecause the resource has been consumed.
Dialogue: 0,0:19:32.52,0:19:39.79,Default,,0000,0000,0000,,When expenses are incurred is when \Nthe resources are used or consumed.
Dialogue: 0,0:19:39.79,0:19:44.58,Default,,0000,0000,0000,,That means that we need to record \Nan expense, ok?
Dialogue: 0,0:19:44.58,0:19:48.36,Default,,0000,0000,0000,,So in this case the only one, \Nand adjusting entry should be recorded
Dialogue: 0,0:19:48.36,0:19:52.68,Default,,0000,0000,0000,,to recognize the expense.
Dialogue: 0,0:19:52.68,0:19:55.79,Default,,0000,0000,0000,,Any question on this?
Dialogue: 0,0:19:58.61,0:20:01.67,Default,,0000,0000,0000,,Is it clear?
Dialogue: 0,0:20:01.67,0:20:07.63,Default,,0000,0000,0000,,Ok, we will go to the next one,\Nthank you Jade.
Dialogue: 0,0:20:11.17,0:20:13.79,Default,,0000,0000,0000,,Number three,
Dialogue: 0,0:20:14.83,0:20:18.29,Default,,0000,0000,0000,,if an entity fails to adjust\Nthe prepaid rent account
Dialogue: 0,0:20:18.29,0:20:20.73,Default,,0000,0000,0000,,for rent that has expired,
Dialogue: 0,0:20:20.73,0:20:25.32,Default,,0000,0000,0000,,what effect will this have on the \Nmonthly financial statement?
Dialogue: 0,0:20:25.32,0:20:28.97,Default,,0000,0000,0000,,Here you need to think a bit more\Nbecause it's what's happening,
Dialogue: 0,0:20:28.97,0:20:34.77,Default,,0000,0000,0000,,the adjusting entry was not recorded,\Nwhat would be the effect on that?
Dialogue: 0,0:20:37.83,0:20:40.14,Default,,0000,0000,0000,,I will update the poll.
Dialogue: 0,0:20:58.28,0:21:01.24,Default,,0000,0000,0000,,The previous answer was B.
Dialogue: 0,0:21:44.87,0:21:49.98,Default,,0000,0000,0000,,It is prepaid rent failed to adjust\Nfor the month that was paid.
Dialogue: 0,0:21:49.98,0:21:54.60,Default,,0000,0000,0000,,This is the prepaid rent that was recorded\Nas a prepaid rent
Dialogue: 0,0:21:54.67,0:21:59.70,Default,,0000,0000,0000,,but now in this month the rent has expired\Nso it was used,
Dialogue: 0,0:21:59.70,0:22:04.97,Default,,0000,0000,0000,,the office or the building\Nthat we are renting was used, yeah.
Dialogue: 0,0:22:37.11,0:22:42.69,Default,,0000,0000,0000,,You see in my poll you still chose \Nnumber one, is it correct?
Dialogue: 0,0:22:44.31,0:22:47.42,Default,,0000,0000,0000,,Ah, yes, yes. \NI didn't change the numbers,
Dialogue: 0,0:22:47.42,0:22:54.34,Default,,0000,0000,0000,,I just updated the poll solutions,\Nbut I didn't change the number.
Dialogue: 0,0:22:55.91,0:23:00.27,Default,,0000,0000,0000,,This is for the question three, for each \Nquestion I update the poll,
Dialogue: 0,0:23:00.46,0:23:03.75,Default,,0000,0000,0000,,I do not change the number because that \Ntakes a bit more time
Dialogue: 0,0:23:03.75,0:23:07.58,Default,,0000,0000,0000,,to change that number\Nso I just update the answers
Dialogue: 0,0:23:07.58,0:23:13.60,Default,,0000,0000,0000,,to lead them in zero, \Nyou come out again for each question.
Dialogue: 0,0:23:17.11,0:23:24.37,Default,,0000,0000,0000,,Ok, so we have a distribution of answers\Nand now there is a whole distribution
Dialogue: 0,0:23:24.37,0:23:29.23,Default,,0000,0000,0000,,of the answers,\Nso I think this is important to explain.
Dialogue: 0,0:23:29.23,0:23:33.35,Default,,0000,0000,0000,,If an entity fails to adjust \Na prepaid rent account
Dialogue: 0,0:23:33.35,0:23:36.62,Default,,0000,0000,0000,,that means we have a \Nprepaid rent account
Dialogue: 0,0:23:36.62,0:23:42.11,Default,,0000,0000,0000,,we pay in advance the rent \Nof the office,
Dialogue: 0,0:23:42.11,0:23:45.58,Default,,0000,0000,0000,,we'll assume that this is the rent \Nof the office.
Dialogue: 0,0:23:45.58,0:23:50.78,Default,,0000,0000,0000,,We pay in advance the rent of the office\Nbefore we use the office, we pay.
Dialogue: 0,0:23:50.78,0:23:52.57,Default,,0000,0000,0000,,How do we record that?
Dialogue: 0,0:23:52.57,0:23:58.39,Default,,0000,0000,0000,,We record that as a prepayment\Nwhich is an asset, we debit that,
Dialogue: 0,0:23:58.39,0:24:01.43,Default,,0000,0000,0000,,and we credit cash.
Dialogue: 0,0:24:01.43,0:24:04.46,Default,,0000,0000,0000,,So we debit prepayment,\Nwe credit cash.
Dialogue: 0,0:24:04.46,0:24:07.52,Default,,0000,0000,0000,,That was the original entry.
Dialogue: 0,0:24:07.52,0:24:13.22,Default,,0000,0000,0000,,Now at the end of this period,\Nit says that the rent has expired
Dialogue: 0,0:24:13.22,0:24:18.63,Default,,0000,0000,0000,,so we used the office for this period\Nso that is what we need to adjust.
Dialogue: 0,0:24:18.63,0:24:26.92,Default,,0000,0000,0000,,We need to credit the prepaid rent\Nfor the amount of the rent that expired
Dialogue: 0,0:24:27.62,0:24:31.84,Default,,0000,0000,0000,,we need to credit prepaid rent\Nand we need to debit the expense.
Dialogue: 0,0:24:33.54,0:24:35.45,Default,,0000,0000,0000,,What happens if we do not do this?
Dialogue: 0,0:24:35.45,0:24:40.40,Default,,0000,0000,0000,,I will write in the same paper \Nwhat this means,
Dialogue: 0,0:24:40.40,0:24:42.58,Default,,0000,0000,0000,,so we will...
Dialogue: 0,0:24:42.60,0:24:49.44,Default,,0000,0000,0000,,when we do the adjustment \Nwe will increase, ok, the expenses,
Dialogue: 0,0:24:55.64,0:24:59.60,Default,,0000,0000,0000,,we increase expenses, \Nthat is one of the entries,
Dialogue: 0,0:24:59.60,0:25:06.40,Default,,0000,0000,0000,,we debit rent expense\Nand we will decrease the prepaid rent,
Dialogue: 0,0:25:06.64,0:25:08.78,Default,,0000,0000,0000,,the prepayment, ok?
Dialogue: 0,0:25:08.78,0:25:11.91,Default,,0000,0000,0000,,I will just put prepayment, \Npre.
Dialogue: 0,0:25:12.19,0:25:17.52,Default,,0000,0000,0000,,This is the prepaid rent \Nwhich is an asset.
Dialogue: 0,0:25:19.35,0:25:24.17,Default,,0000,0000,0000,,What effect will this have \Non the monthly financial statement
Dialogue: 0,0:25:24.17,0:25:26.42,Default,,0000,0000,0000,,if we do not record this?
Dialogue: 0,0:25:26.42,0:25:30.44,Default,,0000,0000,0000,,If we do not do this, \Nwhat is the effect?
Dialogue: 0,0:25:30.44,0:25:33.65,Default,,0000,0000,0000,,What happened with the expenses?
Dialogue: 0,0:25:34.16,0:25:41.85,Default,,0000,0000,0000,,Expenses will be understated \Nbecause we didn't record this.
Dialogue: 0,0:25:42.47,0:25:49.55,Default,,0000,0000,0000,,What happens we will have in assets,\Nassets will be overstated.
Dialogue: 0,0:25:49.55,0:25:53.71,Default,,0000,0000,0000,,So to find the right answer here\Nyou need to look at all the answers.
Dialogue: 0,0:25:53.71,0:26:01.21,Default,,0000,0000,0000,,What answers we had that assets \Nare overstated? Only D and E.
Dialogue: 0,0:26:01.49,0:26:05.82,Default,,0000,0000,0000,,In C, well...\NSorry, C, D and E.
Dialogue: 0,0:26:05.96,0:26:12.84,Default,,0000,0000,0000,,In A it doesn't say anything \Nabout assets
Dialogue: 0,0:26:12.84,0:26:15.56,Default,,0000,0000,0000,,B, nothing about assets,
Dialogue: 0,0:26:16.63,0:26:21.28,Default,,0000,0000,0000,,so only C, D and E assets \Nwill be overstated.
Dialogue: 0,0:26:21.52,0:26:27.50,Default,,0000,0000,0000,,That is one thing because of this,\Nbecause we didn't decrease the prepayment
Dialogue: 0,0:26:27.50,0:26:28.57,Default,,0000,0000,0000,,which is an asset.
Dialogue: 0,0:26:28.57,0:26:32.20,Default,,0000,0000,0000,,Assets will be all overstated.
Dialogue: 0,0:26:32.20,0:26:36.21,Default,,0000,0000,0000,,How will we know which one is correct?\NC, D or E?
Dialogue: 0,0:26:36.19,0:26:41.57,Default,,0000,0000,0000,,We need to look at those expenses\Nwill be understated,
Dialogue: 0,0:26:41.57,0:26:49.36,Default,,0000,0000,0000,,but we don't have this,\NC, D and E talk about profits.
Dialogue: 0,0:26:49.36,0:26:54.52,Default,,0000,0000,0000,,Then you need to relate profit \Nwith expenses.
Dialogue: 0,0:26:54.52,0:26:59.55,Default,,0000,0000,0000,,If expenses are understated,\Nwhat happens with profits?
Dialogue: 0,0:27:00.56,0:27:06.50,Default,,0000,0000,0000,,Profit will be overstated, ok?\NProfit will be overstated.
Dialogue: 0,0:27:07.86,0:27:11.18,Default,,0000,0000,0000,,That's why E will be incorrect answer.
Dialogue: 0,0:27:12.56,0:27:16.33,Default,,0000,0000,0000,,Is that clear that, very well?\NProfit increases?
Dialogue: 0,0:27:16.45,0:27:20.36,Default,,0000,0000,0000,,So we need to relate this, \Nyou can see now we are using
Dialogue: 0,0:27:20.36,0:27:23.44,Default,,0000,0000,0000,,all the elements that you had\Nplanned before, ok?
Dialogue: 0,0:27:23.61,0:27:26.56,Default,,0000,0000,0000,,Profit equals revenues plus expenses.
Dialogue: 0,0:27:26.85,0:27:31.72,Default,,0000,0000,0000,,These expenses are understated, \Nprofit is overstated.
Dialogue: 0,0:27:32.79,0:27:34.96,Default,,0000,0000,0000,,Any question?\NOk.
Dialogue: 0,0:27:46.52,0:27:51.86,Default,,0000,0000,0000,,Yes, (INAUDIBLE)\NI need to add one more thing.
Dialogue: 0,0:27:51.86,0:27:57.60,Default,,0000,0000,0000,,Profit will be overstated and that is \Nthe answer for question D and E.
Dialogue: 0,0:27:57.60,0:28:00.72,Default,,0000,0000,0000,,What is the difference between D and E?
Dialogue: 0,0:28:01.69,0:28:08.93,Default,,0000,0000,0000,,Equity in D will be understated,\Nin E equity will be overstated.
Dialogue: 0,0:28:09.84,0:28:13.98,Default,,0000,0000,0000,,So now we need to relate \Nthe profit with equity.
Dialogue: 0,0:28:14.47,0:28:19.71,Default,,0000,0000,0000,,So when profit is overstated,\Nequity is overstated.
Dialogue: 0,0:28:19.71,0:28:22.77,Default,,0000,0000,0000,,If profit is understated, \NEquity is understated.
Dialogue: 0,0:28:22.77,0:28:24.76,Default,,0000,0000,0000,,So what is correct?
Dialogue: 0,0:28:24.76,0:28:30.81,Default,,0000,0000,0000,,Asset overstated, profit and equity \Nwould be overstated.
Dialogue: 0,0:28:31.89,0:28:39.36,Default,,0000,0000,0000,,Ok, that answer your question Jade?\NGood.
Dialogue: 0,0:28:41.33,0:28:44.66,Default,,0000,0000,0000,,Ok, so we will go through the last one.
Dialogue: 0,0:28:51.71,0:28:54.50,Default,,0000,0000,0000,,Here you have the last one
Dialogue: 0,0:28:56.89,0:29:04.45,Default,,0000,0000,0000,,On 1st September Carlson Limited borrowed \N$10,000 from the bank for three months
Dialogue: 0,0:29:04.45,0:29:11.96,Default,,0000,0000,0000,,at the annual interest rate of 9%.\NAnnual interest rate 9%.
Dialogue: 0,0:29:11.96,0:29:16.57,Default,,0000,0000,0000,,Principal and interest are payable \Nto the bank on 1st December,
Dialogue: 0,0:29:16.57,0:29:21.84,Default,,0000,0000,0000,,so this is for three months long.
Dialogue: 0,0:29:21.84,0:29:24.68,Default,,0000,0000,0000,,If the company prepares monthly \Nfinancial statements
Dialogue: 0,0:29:24.68,0:29:29.53,Default,,0000,0000,0000,,the adjusting entry that the company \Nshould make for interest on 30th September
Dialogue: 0,0:29:29.53,0:29:35.44,Default,,0000,0000,0000,,that means after one month would be\Nwhich of these ones?
Dialogue: 0,0:29:35.44,0:29:39.57,Default,,0000,0000,0000,,I will reupdate the poll.
Dialogue: 0,0:31:38.22,0:31:44.87,Default,,0000,0000,0000,,Ok. So how we determine this,
Dialogue: 0,0:31:44.87,0:31:50.11,Default,,0000,0000,0000,,we need to look at what is the interest\Nfor one month
Dialogue: 0,0:31:50.11,0:31:54.79,Default,,0000,0000,0000,,because the expense incurred in this case\Nthe interest expense,
Dialogue: 0,0:31:54.79,0:31:59.18,Default,,0000,0000,0000,,is the interest that...
Dialogue: 0,0:31:59.18,0:32:03.36,Default,,0000,0000,0000,,that is the interest for only one month.
Dialogue: 0,0:32:03.36,0:32:07.63,Default,,0000,0000,0000,,We are preparing the adjusting entry \Nat 30th of September.
Dialogue: 0,0:32:07.63,0:32:14.64,Default,,0000,0000,0000,,The loan started on 1st September\Nso it's the interest for one month.
Dialogue: 0,0:32:14.64,0:32:20.66,Default,,0000,0000,0000,,This will clarify the answer for if you\Ncalculate the interest for the year.
Dialogue: 0,0:32:20.66,0:32:27.21,Default,,0000,0000,0000,,The annual interest rate is 9%,\Nfor one month it will be 9% divided by 12
Dialogue: 0,0:32:27.21,0:32:31.37,Default,,0000,0000,0000,,that is the interest per month,\Nand then you multiply by $10000
Dialogue: 0,0:32:31.52,0:32:36.51,Default,,0000,0000,0000,,to calculate what is the interest \Nper month which is $75.
Dialogue: 0,0:32:36.90,0:32:40.38,Default,,0000,0000,0000,,So at the end of September \Nwe need to record,
Dialogue: 0,0:32:40.38,0:32:46.19,Default,,0000,0000,0000,,debit interest expense $75,\Nand credit interest payable
Dialogue: 0,0:32:46.19,0:32:52.38,Default,,0000,0000,0000,,because it will not be paid until\N1st December.
Dialogue: 0,0:32:52.66,0:32:59.99,Default,,0000,0000,0000,,So we debit interest expense $75\Nwe credit interest payable, $75,
Dialogue: 0,0:32:59.99,0:33:03.74,Default,,0000,0000,0000,,the correct answer is D, ok?
Dialogue: 0,0:33:07.34,0:33:09.100,Default,,0000,0000,0000,,Ok at that?
Dialogue: 0,0:33:12.22,0:33:16.33,Default,,0000,0000,0000,,When we have a loan \Nwe need to pay interest.
Dialogue: 0,0:33:16.41,0:33:18.83,Default,,0000,0000,0000,,What is that interest?\NIt's an expense.
Dialogue: 0,0:33:18.83,0:33:23.47,Default,,0000,0000,0000,,It's the expense incurred because \Nwe borrowed money.
Dialogue: 0,0:33:23.47,0:33:28.89,Default,,0000,0000,0000,,And we can calculate based on \Nthe interest rate.
Dialogue: 0,0:33:28.89,0:33:33.54,Default,,0000,0000,0000,,The interest rate is always given \Nand always is given per annum
Dialogue: 0,0:33:33.87,0:33:36.57,Default,,0000,0000,0000,,so what is the annual interest rate?
Dialogue: 0,0:33:36.57,0:33:41.91,Default,,0000,0000,0000,,In this case it is 9%, \Nyou can see here.
Dialogue: 0,0:33:41.91,0:33:45.86,Default,,0000,0000,0000,,9% is the interest rate,\Nbut this is the interest rate
Dialogue: 0,0:33:45.86,0:33:48.26,Default,,0000,0000,0000,,for 12 months, ok?
Dialogue: 0,0:33:49.13,0:33:52.100,Default,,0000,0000,0000,,So to calculate, very well Joshua,\Nto calculate per month
Dialogue: 0,0:33:52.100,0:33:59.92,Default,,0000,0000,0000,,we need to multiply the 9% by 112,\Nor simply divide it by 12, ok?
Dialogue: 0,0:33:59.92,0:34:04.13,Default,,0000,0000,0000,,And then you will have what is \Nthe interest per month
Dialogue: 0,0:34:04.13,0:34:09.74,Default,,0000,0000,0000,,because between the 1st of September\Nand 30th September
Dialogue: 0,0:34:09.74,0:34:13.76,Default,,0000,0000,0000,,we need to prepare the adjusting entries,\Nit's one month.
Dialogue: 0,0:34:13.76,0:34:19.70,Default,,0000,0000,0000,,so the interest expense will be \Nthe interest for only one month, ok?
Dialogue: 0,0:34:20.15,0:34:26.75,Default,,0000,0000,0000,,So very good.\NGood Adash and that is $75.
Dialogue: 0,0:34:27.65,0:34:30.24,Default,,0000,0000,0000,,Ok, so we've finished \Nthe multiple choice questions,
Dialogue: 0,0:34:30.24,0:34:36.58,Default,,0000,0000,0000,,do you have any questions about concept\Nbecause now we will apply the concept
Dialogue: 0,0:34:36.58,0:34:40.86,Default,,0000,0000,0000,,in exercises about adjusting entries,
Dialogue: 0,0:34:40.86,0:34:45.52,Default,,0000,0000,0000,,so any question about concepts that \Nyou would like to ask at this point?
Dialogue: 0,0:34:49.31,0:34:53.12,Default,,0000,0000,0000,,All good?\NOk.
Dialogue: 0,0:34:53.81,0:34:58.44,Default,,0000,0000,0000,,So, we will go...\NExcellent Ruby, thank you.
Dialogue: 0,0:34:59.34,0:35:06.66,Default,,0000,0000,0000,,Yes, yeah, we will go through \Nthe practice questions now.
Dialogue: 0,0:35:07.45,0:35:12.42,Default,,0000,0000,0000,,And I will start briefly with a very...
Dialogue: 0,0:35:13.15,0:35:15.98,Default,,0000,0000,0000,,a very brief review of what\Nyou have learnt
Dialogue: 0,0:35:15.98,0:35:18.50,Default,,0000,0000,0000,,about adjusting entries.
Dialogue: 0,0:35:21.46,0:35:24.46,Default,,0000,0000,0000,,It is only three months,\Njust another.
Dialogue: 0,0:35:24.46,0:35:28.10,Default,,0000,0000,0000,,It's only three months long because \Nit starts on 1st September
Dialogue: 0,0:35:28.10,0:35:32.44,Default,,0000,0000,0000,,and is payable on 1st December.
Dialogue: 0,0:35:32.56,0:35:35.41,Default,,0000,0000,0000,,The interest and the principal both.
Dialogue: 0,0:35:35.41,0:35:43.74,Default,,0000,0000,0000,,So you pay back the $10000 on 1st December\Nwith all the interest of the three months.
Dialogue: 0,0:35:45.97,0:35:54.63,Default,,0000,0000,0000,,Ok, now we will talk a bit about\Nadjusting entries.
Dialogue: 0,0:35:59.41,0:36:03.12,Default,,0000,0000,0000,,I will explain using this diagram \Nthat you have in your PowerPoint
Dialogue: 0,0:36:03.12,0:36:07.59,Default,,0000,0000,0000,,and you have seen in your videos,\NI will not go into whole detail of course
Dialogue: 0,0:36:07.59,0:36:12.65,Default,,0000,0000,0000,,but just with this...\Nthis is the big summary.
Dialogue: 0,0:36:12.84,0:36:15.27,Default,,0000,0000,0000,,The big summary of adjusting entries.
Dialogue: 0,0:36:15.79,0:36:21.93,Default,,0000,0000,0000,,We have two types \Nof adjusting entries
Dialogue: 0,0:36:21.93,0:36:25.44,Default,,0000,0000,0000,,or I would say four types\Nif we combine revenues and expenses.
Dialogue: 0,0:36:25.44,0:36:30.21,Default,,0000,0000,0000,,But we have the accruals \Nand we have the prepayments, ok?
Dialogue: 0,0:36:30.21,0:36:34.44,Default,,0000,0000,0000,,They are two different adjusting entries.\NWhat means accrual?
Dialogue: 0,0:36:34.44,0:36:39.58,Default,,0000,0000,0000,,Accrual if we're talking about revenue \Nmeans receivable, ok?
Dialogue: 0,0:36:39.58,0:36:47.48,Default,,0000,0000,0000,,Accrued revenue it will be the same as \Nto say revenue receivable.
Dialogue: 0,0:36:48.18,0:36:52.61,Default,,0000,0000,0000,,Accrued expenses when you see this term,\Naccrued expenses,
Dialogue: 0,0:36:52.61,0:36:56.63,Default,,0000,0000,0000,,that means expenses payable, ok?
Dialogue: 0,0:36:56.63,0:37:00.66,Default,,0000,0000,0000,,So accruals means receivable or payable
Dialogue: 0,0:37:00.66,0:37:05.10,Default,,0000,0000,0000,,depending on whether it's revenues \Nor expenses.
Dialogue: 0,0:37:05.83,0:37:08.82,Default,,0000,0000,0000,,And then we have the prepayments.
Dialogue: 0,0:37:08.82,0:37:14.01,Default,,0000,0000,0000,,Prepayments means payments in advance, \Nok?
Dialogue: 0,0:37:14.27,0:37:20.88,Default,,0000,0000,0000,,We can receive a payment in advance\Nand that is what we call
Dialogue: 0,0:37:21.16,0:37:25.81,Default,,0000,0000,0000,,unearned revenue or revenue received \Nin advance, ok?
Dialogue: 0,0:37:25.81,0:37:30.02,Default,,0000,0000,0000,,That is the payment received \Nin advance,
Dialogue: 0,0:37:30.17,0:37:36.34,Default,,0000,0000,0000,,Or we can pay in advance and that is \Nwhat we call prepayments.
Dialogue: 0,0:37:38.19,0:37:43.14,Default,,0000,0000,0000,,So these adjustments, \Nand these are all the adjustments,
Dialogue: 0,0:37:43.14,0:37:47.46,Default,,0000,0000,0000,,there are no other adjustments for \Ntiming differences.
Dialogue: 0,0:37:47.46,0:37:50.80,Default,,0000,0000,0000,,There are adjustments to correct errors,\Nwe will not go there,
Dialogue: 0,0:37:50.80,0:37:53.42,Default,,0000,0000,0000,,we are talking about the timing difference
Dialogue: 0,0:37:53.42,0:37:57.61,Default,,0000,0000,0000,,that means to record revenues \Nwhen they are earned,
Dialogue: 0,0:37:57.61,0:37:59.85,Default,,0000,0000,0000,,expenses when they are incurred.
Dialogue: 0,0:37:59.85,0:38:03.30,Default,,0000,0000,0000,,All the purpose of adjusting entries \Nis that,
Dialogue: 0,0:38:03.30,0:38:06.59,Default,,0000,0000,0000,,to record the revenues \Nin the accounting period
Dialogue: 0,0:38:06.59,0:38:12.99,Default,,0000,0000,0000,,that are earned in that accounting period\Nand to record expenses that are incurred
Dialogue: 0,0:38:12.99,0:38:16.22,Default,,0000,0000,0000,,in that accounting period.
Dialogue: 0,0:38:16.22,0:38:20.81,Default,,0000,0000,0000,,From the normal transactions that\Nyou learnt last week,
Dialogue: 0,0:38:20.81,0:38:25.36,Default,,0000,0000,0000,,we may have many cases in which revenue \Nwas not recorded,
Dialogue: 0,0:38:25.36,0:38:30.13,Default,,0000,0000,0000,,expenses was not recognized as well, \Nand we need to adjust them
Dialogue: 0,0:38:30.13,0:38:33.17,Default,,0000,0000,0000,,because the main purpose \Nof the financial statements
Dialogue: 0,0:38:33.17,0:38:38.85,Default,,0000,0000,0000,,in particular the income statement\Nis to show the revenues
Dialogue: 0,0:38:38.85,0:38:43.14,Default,,0000,0000,0000,,earned in that period,\Nin the period of the income statement
Dialogue: 0,0:38:43.14,0:38:48.14,Default,,0000,0000,0000,,and to show the expenses incurred \Nin the same period.
Dialogue: 0,0:38:48.14,0:38:51.12,Default,,0000,0000,0000,,So that is the purpose \Nof adjusting entries,
Dialogue: 0,0:38:51.12,0:38:58.74,Default,,0000,0000,0000,,to reflect revenues earned and expenses \Nincurred in the accounting period.
Dialogue: 0,0:38:59.13,0:39:03.01,Default,,0000,0000,0000,,So this is the big summary.\NNow how do we deal with this?
Dialogue: 0,0:39:03.01,0:39:09.32,Default,,0000,0000,0000,,Well, in the case of prepayments
Dialogue: 0,0:39:09.32,0:39:11.69,Default,,0000,0000,0000,,in the case of prepayments
Dialogue: 0,0:39:11.69,0:39:18.50,Default,,0000,0000,0000,,we have different accounts that can\Nbe considered as a prepayment.
Dialogue: 0,0:39:18.50,0:39:23.23,Default,,0000,0000,0000,,One is the prepaid expenses like
Dialogue: 0,0:39:23.23,0:39:27.06,Default,,0000,0000,0000,,prepaid insurance, prepaid rent,
Dialogue: 0,0:39:27.06,0:39:32.59,Default,,0000,0000,0000,,but there are others that we can give \Nthe same treatment of this prepayment
Dialogue: 0,0:39:32.59,0:39:36.64,Default,,0000,0000,0000,,which is supplies or depreciations.
Dialogue: 0,0:39:36.64,0:39:41.83,Default,,0000,0000,0000,,That means the payments that \Nthe company makes in advance
Dialogue: 0,0:39:41.83,0:39:45.22,Default,,0000,0000,0000,,and therefore they are considered \Nas prepayments.
Dialogue: 0,0:39:45.22,0:39:50.33,Default,,0000,0000,0000,,So what are the terms involved \Nin this prepaid expenses?
Dialogue: 0,0:39:50.33,0:39:56.23,Default,,0000,0000,0000,,Well, we have an asset that has an \Nunadjusted balance.
Dialogue: 0,0:39:56.23,0:40:03.17,Default,,0000,0000,0000,,For example, we have prepaid insurance.\NThat is an account of asset.
Dialogue: 0,0:40:03.17,0:40:09.24,Default,,0000,0000,0000,,And we do not adjust this because we pay \Nfor that at the beginning of the t,
Dialogue: 0,0:40:09.24,0:40:15.38,Default,,0000,0000,0000,,ok, 1st of January for example,\Nand then on the 30th June we are halfway
Dialogue: 0,0:40:15.38,0:40:19.10,Default,,0000,0000,0000,,of the total period provided \Nby the policy.
Dialogue: 0,0:40:19.10,0:40:24.32,Default,,0000,0000,0000,,The policy normally, \Nthe insurance policy covers 12 months.
Dialogue: 0,0:40:24.32,0:40:27.63,Default,,0000,0000,0000,,So we are using the policy \Nduring 12 months.
Dialogue: 0,0:40:27.63,0:40:30.10,Default,,0000,0000,0000,,But what's happening in June?
Dialogue: 0,0:40:30.10,0:40:35.80,Default,,0000,0000,0000,,Well, we do not have the same amount \Nin assets because we already consumed
Dialogue: 0,0:40:35.80,0:40:41.81,Default,,0000,0000,0000,,half of the policy, six months,\Nso half of the policy has been consumed.
Dialogue: 0,0:40:42.60,0:40:46.74,Default,,0000,0000,0000,,Then we need to adjust the amount\Nin assets.
Dialogue: 0,0:40:46.74,0:40:52.34,Default,,0000,0000,0000,,Here you had the unadJusted balance \Nof the asset,
Dialogue: 0,0:40:53.01,0:40:56.22,Default,,0000,0000,0000,,that is the total amount of the policy,\Nwe need to adjust that.
Dialogue: 0,0:40:56.42,0:41:00.53,Default,,0000,0000,0000,,How do we adjust that?\NWe need to record an expense.
Dialogue: 0,0:41:00.53,0:41:05.87,Default,,0000,0000,0000,,An expense for the six months use \Nof the policy.
Dialogue: 0,0:41:05.87,0:41:10.48,Default,,0000,0000,0000,,So we will record debit expense,\Nthat is the adjusting entry,
Dialogue: 0,0:41:10.48,0:41:15.69,Default,,0000,0000,0000,,we debit the expense, \Nand we decrease the asset
Dialogue: 0,0:41:15.69,0:41:21.22,Default,,0000,0000,0000,,that means we credit \Nthe prepaid insurance.
Dialogue: 0,0:41:21.22,0:41:26.73,Default,,0000,0000,0000,,So you can see here,\Nthis is your adjusting entry.
Dialogue: 0,0:41:26.73,0:41:29.94,Default,,0000,0000,0000,,We have a debit entry, \Nwe have a credit entry.
Dialogue: 0,0:41:29.94,0:41:35.54,Default,,0000,0000,0000,,We debit insurance expense, \Nwe credit prepaid insurance.
Dialogue: 0,0:41:35.54,0:41:39.96,Default,,0000,0000,0000,,So this is one case.
Dialogue: 0,0:41:39.96,0:41:43.88,Default,,0000,0000,0000,,And the same we will use for prepaid rent,
Dialogue: 0,0:41:43.88,0:41:49.56,Default,,0000,0000,0000,,for supplies, for depreciation, ok?
Dialogue: 0,0:41:49.56,0:41:52.52,Default,,0000,0000,0000,,Jade did the question.
Dialogue: 0,0:42:00.96,0:42:03.84,Default,,0000,0000,0000,,Oh good, excellent Jade.\NThat's my purpose,
Dialogue: 0,0:42:03.92,0:42:08.76,Default,,0000,0000,0000,,just to explain in detail what it means, \Nthis thing.
Dialogue: 0,0:42:08.76,0:42:12.48,Default,,0000,0000,0000,,Is there anybody that might have \Na question on this?
Dialogue: 0,0:42:15.42,0:42:19.85,Default,,0000,0000,0000,,We will go through the four\Nthat are adjusting entries.
Dialogue: 0,0:42:19.85,0:42:24.65,Default,,0000,0000,0000,,This is related to the prepaid expenses.
Dialogue: 0,0:42:26.99,0:42:30.58,Default,,0000,0000,0000,,Ok, we go through the second one.
Dialogue: 0,0:42:30.96,0:42:35.97,Default,,0000,0000,0000,,The second one is what we call\Nthe un-earned revenues.
Dialogue: 0,0:42:35.97,0:42:41.87,Default,,0000,0000,0000,,So revenues received in advance,\Nwhat is the concept?
Dialogue: 0,0:42:42.34,0:42:46.97,Default,,0000,0000,0000,,Imagine that the company \Nhas a building,
Dialogue: 0,0:42:46.97,0:42:50.62,Default,,0000,0000,0000,,and they are renting offices
Dialogue: 0,0:42:50.62,0:42:56.64,Default,,0000,0000,0000,,from this building so they have a \Nnumber of clients that rent offices.
Dialogue: 0,0:42:57.33,0:43:02.37,Default,,0000,0000,0000,,And they ask the tenants\Nto pay in advance
Dialogue: 0,0:43:02.37,0:43:05.53,Default,,0000,0000,0000,,before they start using the building,
Dialogue: 0,0:43:05.53,0:43:10.68,Default,,0000,0000,0000,,they have to pay for example \Nthree months in advance.
Dialogue: 0,0:43:10.68,0:43:14.34,Default,,0000,0000,0000,,So the company received the cash \Nfor this,
Dialogue: 0,0:43:14.34,0:43:18.33,Default,,0000,0000,0000,,but the tenant still is not using \Nthe office,
Dialogue: 0,0:43:18.33,0:43:20.48,Default,,0000,0000,0000,,so how will we record this first entry?
Dialogue: 0,0:43:20.48,0:43:22.78,Default,,0000,0000,0000,,This is the entry that you learnt \Nlast week,
Dialogue: 0,0:43:22.78,0:43:24.50,Default,,0000,0000,0000,,this is a normal transaction.
Dialogue: 0,0:43:24.50,0:43:28.88,Default,,0000,0000,0000,,The company receives cash \Nso we will debit cash, ok?
Dialogue: 0,0:43:28.88,0:43:33.83,Default,,0000,0000,0000,,And we will have this \Nunearned revenue
Dialogue: 0,0:43:33.83,0:43:37.82,Default,,0000,0000,0000,,or rent revenue received in advance
Dialogue: 0,0:43:37.82,0:43:42.34,Default,,0000,0000,0000,,which is a liability for that amount.
Dialogue: 0,0:43:42.52,0:43:44.39,Default,,0000,0000,0000,,Why is this a liability?
Dialogue: 0,0:43:44.39,0:43:49.35,Default,,0000,0000,0000,,Because at this point the company \Nhas not provided yet
Dialogue: 0,0:43:49.35,0:43:53.17,Default,,0000,0000,0000,,the office for the tenant to use, ok?
Dialogue: 0,0:43:53.17,0:43:58.68,Default,,0000,0000,0000,,The tenant has not used the office yet,\Nthey pay in advance.
Dialogue: 0,0:43:58.68,0:44:02.52,Default,,0000,0000,0000,,So we have a liability because we have \Nan obligation to provide the office,
Dialogue: 0,0:44:02.52,0:44:05.80,Default,,0000,0000,0000,,the tenant already paid.
Dialogue: 0,0:44:05.80,0:44:09.10,Default,,0000,0000,0000,,Now, what happens after one month
Dialogue: 0,0:44:09.10,0:44:12.17,Default,,0000,0000,0000,,if we are doing financial statements \Nevery month.
Dialogue: 0,0:44:12.17,0:44:17.36,Default,,0000,0000,0000,,We need to prepare an adjusting entry\Nbecause we already provided this service
Dialogue: 0,0:44:17.36,0:44:20.02,Default,,0000,0000,0000,,to the tenant,\Nwe already provided the office,
Dialogue: 0,0:44:20.02,0:44:24.57,Default,,0000,0000,0000,,the tenant used this resource \Nalready one month,
Dialogue: 0,0:44:24.57,0:44:29.26,Default,,0000,0000,0000,,so we need to adjust \Nour liability accounts.
Dialogue: 0,0:44:29.26,0:44:33.74,Default,,0000,0000,0000,,So the liability account has \Nan adjusted balance, ok?
Dialogue: 0,0:44:33.74,0:44:38.92,Default,,0000,0000,0000,,When the tenant pays in advance,\Nand now after one month
Dialogue: 0,0:44:38.92,0:44:44.53,Default,,0000,0000,0000,,we need to reduce this for the month\Nthe office was already used.
Dialogue: 0,0:44:44.53,0:44:50.04,Default,,0000,0000,0000,,So we will debit this liability\Nthat is part of the adjusting entry,
Dialogue: 0,0:44:50.04,0:44:57.01,Default,,0000,0000,0000,,and we will credit revenue because now\Nwe earn this revenue,
Dialogue: 0,0:44:57.01,0:44:59.86,Default,,0000,0000,0000,,that is the rent revenue.
Dialogue: 0,0:44:59.86,0:45:03.75,Default,,0000,0000,0000,,We earn that because \Nwe already provided one month
Dialogue: 0,0:45:03.75,0:45:09.11,Default,,0000,0000,0000,,the renting of the office to the tenant.
Dialogue: 0,0:45:09.11,0:45:13.48,Default,,0000,0000,0000,,So here you have again, \Nthe adjusting entry.
Dialogue: 0,0:45:13.48,0:45:17.15,Default,,0000,0000,0000,,We have one debit entry,
Dialogue: 0,0:45:17.15,0:45:22.00,Default,,0000,0000,0000,,the rent revenue received in advance,
Dialogue: 0,0:45:22.00,0:45:25.40,Default,,0000,0000,0000,,a debit entry, \Nand we will have a credit entry
Dialogue: 0,0:45:25.40,0:45:30.13,Default,,0000,0000,0000,,which is simply rent revenue.
Dialogue: 0,0:45:33.22,0:45:36.35,Default,,0000,0000,0000,,Any question on this second one?
Dialogue: 0,0:45:40.50,0:45:44.47,Default,,0000,0000,0000,,We will practice with many\Nexercises today
Dialogue: 0,0:45:44.47,0:45:50.10,Default,,0000,0000,0000,,for you to have a very, very clear \Nunderstanding of the adjusting entries.
Dialogue: 0,0:45:51.18,0:45:54.74,Default,,0000,0000,0000,,Ok, the last two.
Dialogue: 0,0:45:54.74,0:45:59.42,Default,,0000,0000,0000,,The last two I would say they are simple\Nadjusting entries.
Dialogue: 0,0:45:59.85,0:46:04.86,Default,,0000,0000,0000,,We have accrued revenues.\NAs I mentioned before,
Dialogue: 0,0:46:04.86,0:46:11.58,Default,,0000,0000,0000,,accrued revenues means \Nrevenues receivable.
Dialogue: 0,0:46:11.58,0:46:18.93,Default,,0000,0000,0000,,This is the case when the company\Nsells products or provides services
Dialogue: 0,0:46:19.15,0:46:23.98,Default,,0000,0000,0000,,but we still do not record that sale
Dialogue: 0,0:46:24.08,0:46:27.95,Default,,0000,0000,0000,,and we have not received the cash yet,
Dialogue: 0,0:46:27.95,0:46:32.15,Default,,0000,0000,0000,,but the service is provided\Nor the products are delivered
Dialogue: 0,0:46:32.15,0:46:34.16,Default,,0000,0000,0000,,so we need to record revenue.
Dialogue: 0,0:46:34.16,0:46:38.98,Default,,0000,0000,0000,,If we have not recorded this \Nin the normal journal entry
Dialogue: 0,0:46:38.98,0:46:44.52,Default,,0000,0000,0000,,that you learnt last week,\Nwe will need to record the revenue.
Dialogue: 0,0:46:44.52,0:46:49.44,Default,,0000,0000,0000,,Sales revenue or service revenue,\Nso we credit this.
Dialogue: 0,0:46:49.44,0:46:53.92,Default,,0000,0000,0000,,What will be the other accounting ball?\NIt will be the receivable.
Dialogue: 0,0:46:53.92,0:46:56.58,Default,,0000,0000,0000,,An accounts receivable which is an asset
Dialogue: 0,0:46:56.58,0:47:00.84,Default,,0000,0000,0000,,so here you have debit \Nthe accounts receivable
Dialogue: 0,0:47:00.84,0:47:05.27,Default,,0000,0000,0000,,credit service revenue \Nor sales revenue,
Dialogue: 0,0:47:05.27,0:47:10.32,Default,,0000,0000,0000,,depending on whether we are \Nselling produce or providing services.
Dialogue: 0,0:47:10.32,0:47:13.45,Default,,0000,0000,0000,,So that is the third adjusting entry
Dialogue: 0,0:47:13.45,0:47:17.98,Default,,0000,0000,0000,,and the last adjusting entry \Nis accrued expenses.
Dialogue: 0,0:47:17.98,0:47:23.17,Default,,0000,0000,0000,,That means expenses payable.
Dialogue: 0,0:47:23.17,0:47:29.60,Default,,0000,0000,0000,,So this is the case when we have \Nan expense incurred
Dialogue: 0,0:47:29.60,0:47:35.91,Default,,0000,0000,0000,,but we have not recorded that,\Nthe most typical case is employees
Dialogue: 0,0:47:35.91,0:47:40.79,Default,,0000,0000,0000,,that work during the month.\NWe have not paid their salaries yet
Dialogue: 0,0:47:40.79,0:47:45.25,Default,,0000,0000,0000,,because we pay the first days \Nof the following month,
Dialogue: 0,0:47:45.25,0:47:49.15,Default,,0000,0000,0000,,so we didn't record the expense\Nbut they already worked,
Dialogue: 0,0:47:49.15,0:47:52.50,Default,,0000,0000,0000,,so there is a resource that has \Nbeen consumed
Dialogue: 0,0:47:52.50,0:47:56.61,Default,,0000,0000,0000,,and therefore we need \Nto record an expense.
Dialogue: 0,0:47:56.61,0:48:04.79,Default,,0000,0000,0000,,We need to record an expense \Nand so we debit salaries expense,
Dialogue: 0,0:48:04.79,0:48:09.28,Default,,0000,0000,0000,,for example, but because we have \Nnot paid yet in this period,
Dialogue: 0,0:48:09.28,0:48:14.86,Default,,0000,0000,0000,,we need to record a credit in this \Nliability which is salaries payable.
Dialogue: 0,0:48:14.86,0:48:20.22,Default,,0000,0000,0000,,So here we have our adjusting entry.
Dialogue: 0,0:48:20.83,0:48:28.37,Default,,0000,0000,0000,,This is in a very brief summary what \Nyou have learnt about adjusting entries.
Dialogue: 0,0:48:28.37,0:48:31.02,Default,,0000,0000,0000,,Any question at this point?
Dialogue: 0,0:48:37.44,0:48:39.09,Default,,0000,0000,0000,,All good?
Dialogue: 0,0:48:39.09,0:48:43.88,Default,,0000,0000,0000,,So we can now apply these two \Npractical exercises
Dialogue: 0,0:48:43.88,0:48:47.62,Default,,0000,0000,0000,,and we will work with many \Nadjusting entries,
Dialogue: 0,0:48:47.62,0:48:52.95,Default,,0000,0000,0000,,so you will have the opportunity,\Nto practice now with this
Dialogue: 0,0:48:55.68,0:48:57.66,Default,,0000,0000,0000,,so I will put that...
Dialogue: 0,0:49:22.82,0:49:26.71,Default,,0000,0000,0000,,Can you see the exercise?\NI am not sure about the zoom,
Dialogue: 0,0:49:26.79,0:49:32.23,Default,,0000,0000,0000,,if it is ok or not,\Nbut I hope it's ok.
Dialogue: 0,0:49:32.73,0:49:36.76,Default,,0000,0000,0000,,Ok, excellent, excellent.\NThank you Jade, thank you all of you.
Dialogue: 0,0:49:37.10,0:49:44.17,Default,,0000,0000,0000,,Ok, so we will apply to this exercise\Nand we will start the exercise
Dialogue: 0,0:49:44.17,0:49:47.83,Default,,0000,0000,0000,,at the point that we left last week.
Dialogue: 0,0:49:47.83,0:49:50.52,Default,,0000,0000,0000,,Do you remember what we did last week?
Dialogue: 0,0:49:50.52,0:49:55.75,Default,,0000,0000,0000,,We prepared the normal journal entries \Nthat come from transactions
Dialogue: 0,0:49:55.75,0:50:00.39,Default,,0000,0000,0000,,and then we post the journal entries \Ninto ledger accounts,
Dialogue: 0,0:50:00.39,0:50:04.03,Default,,0000,0000,0000,,and then we prepare a trial balance.
Dialogue: 0,0:50:04.03,0:50:08.36,Default,,0000,0000,0000,,And we call that the unadjusted \Ntrial balance
Dialogue: 0,0:50:08.36,0:50:14.05,Default,,0000,0000,0000,,because it's a trial balance that \Nis prepared before the adjusting entries.
Dialogue: 0,0:50:14.05,0:50:21.05,Default,,0000,0000,0000,,Ok, so we will start with this,\Nthe unadjusted trial balance, ok?
Dialogue: 0,0:50:21.05,0:50:24.15,Default,,0000,0000,0000,,at 30th June.
Dialogue: 0,0:50:24.15,0:50:29.98,Default,,0000,0000,0000,,And as you remember the trial balance\Nis simply the list of all the accounts,
Dialogue: 0,0:50:29.98,0:50:34.29,Default,,0000,0000,0000,,here you can see cash, account receivable,\Nprepaid insurance, supplies,
Dialogue: 0,0:50:34.29,0:50:37.37,Default,,0000,0000,0000,,all the accounts of the company, ok?
Dialogue: 0,0:50:37.37,0:50:41.26,Default,,0000,0000,0000,,With the ending balance at \Nthe end of the period
Dialogue: 0,0:50:41.26,0:50:44.76,Default,,0000,0000,0000,,so you can see the trial balance,\Nthe unadjusted trial balance
Dialogue: 0,0:50:44.76,0:50:49.60,Default,,0000,0000,0000,,is prepared at the end of the period\Nis the first thing that we do
Dialogue: 0,0:50:49.60,0:50:54.48,Default,,0000,0000,0000,,at the end of the period before preparing\Nthe adjusting entries, ok?
Dialogue: 0,0:50:54.48,0:50:57.20,Default,,0000,0000,0000,,So we prepare the unadjusted trial balance
Dialogue: 0,0:50:57.20,0:51:01.65,Default,,0000,0000,0000,,and we have the ending balance \Nfor each of these accounts.
Dialogue: 0,0:51:01.65,0:51:06.52,Default,,0000,0000,0000,,The ending balance of cash,\Nthe ending balance of accounts receivable
Dialogue: 0,0:51:06.52,0:51:13.54,Default,,0000,0000,0000,,and service revenue is sitting \Non the fence, yes.
Dialogue: 0,0:51:14.13,0:51:16.26,Default,,0000,0000,0000,,It moves to the fence, \Nit should be here.
Dialogue: 0,0:51:16.26,0:51:19.09,Default,,0000,0000,0000,,It should be on the column of credit \Nof course,
Dialogue: 0,0:51:19.09,0:51:21.47,Default,,0000,0000,0000,,that is a typing thing.
Dialogue: 0,0:51:21.47,0:51:25.38,Default,,0000,0000,0000,,Service revenue should be \Nin the credit side of course,
Dialogue: 0,0:51:26.03,0:51:28.55,Default,,0000,0000,0000,,76,600.
Dialogue: 0,0:51:28.55,0:51:33.50,Default,,0000,0000,0000,,Salaries expense, rent expense,\Nso you have all of these.
Dialogue: 0,0:51:33.95,0:51:39.42,Default,,0000,0000,0000,,The characteristic of the trial balance is\Nthat total debit should equal total credit
Dialogue: 0,0:51:39.42,0:51:46.20,Default,,0000,0000,0000,,and you can see total debit, 201200\Nand the same as total credit.
Dialogue: 0,0:51:46.20,0:51:51.28,Default,,0000,0000,0000,,So this is our starting point \Nfor this exercise.
Dialogue: 0,0:51:51.28,0:51:52.55,Default,,0000,0000,0000,,What means this?
Dialogue: 0,0:51:52.55,0:51:56.09,Default,,0000,0000,0000,,All the normal journal entries\Nare already recorded,
Dialogue: 0,0:51:56.09,0:51:59.61,Default,,0000,0000,0000,,all of them are posted to \Nthe general ledger
Dialogue: 0,0:51:59.61,0:52:02.96,Default,,0000,0000,0000,,and we prepare this unadjusted \Ntrial balance.
Dialogue: 0,0:52:02.96,0:52:08.46,Default,,0000,0000,0000,,What is next?\NWell, here you have the exercise.
Dialogue: 0,0:52:08.46,0:52:15.88,Default,,0000,0000,0000,,One thing before we go to the next page\Nthese are not the total,
Dialogue: 0,0:52:15.88,0:52:19.36,Default,,0000,0000,0000,,all the accounts of the company.
Dialogue: 0,0:52:19.36,0:52:24.13,Default,,0000,0000,0000,,There are accounts that they have\Nzero balance,
Dialogue: 0,0:52:24.13,0:52:27.32,Default,,0000,0000,0000,,and of course they are not in the \Nunadjusted trial balance
Dialogue: 0,0:52:27.32,0:52:30.13,Default,,0000,0000,0000,,but here you have them listed.
Dialogue: 0,0:52:30.13,0:52:32.100,Default,,0000,0000,0000,,The accumulated depreciation \Nis one account,
Dialogue: 0,0:52:32.100,0:52:37.77,Default,,0000,0000,0000,,office equipment another,\Nelectricity payable, salaries payable,
Dialogue: 0,0:52:37.77,0:52:38.87,Default,,0000,0000,0000,,and so on.
Dialogue: 0,0:52:38.87,0:52:42.20,Default,,0000,0000,0000,,So there are a number of accounts \Nthat have zero balance,
Dialogue: 0,0:52:42.20,0:52:48.20,Default,,0000,0000,0000,,and therefore they are not in this\Nunadjusted trial balance,
Dialogue: 0,0:52:48.20,0:52:52.33,Default,,0000,0000,0000,,but they are accounts.
Dialogue: 0,0:52:53.20,0:52:58.74,Default,,0000,0000,0000,,So we will go through the exercise.
Dialogue: 0,0:52:59.08,0:53:01.50,Default,,0000,0000,0000,,Here we have added data.
Dialogue: 0,0:53:01.50,0:53:06.18,Default,,0000,0000,0000,,This added data refers to \Nthe adjusting entries
Dialogue: 0,0:53:06.18,0:53:08.66,Default,,0000,0000,0000,,that we need to prepare.
Dialogue: 0,0:53:08.66,0:53:13.11,Default,,0000,0000,0000,,They are related to revenues earned
Dialogue: 0,0:53:13.11,0:53:16.18,Default,,0000,0000,0000,,or income earned and expenses incurred
Dialogue: 0,0:53:16.18,0:53:23.13,Default,,0000,0000,0000,,so we need to prepare one adjusting entry\Nfor each of this additional data
Dialogue: 0,0:53:23.13,0:53:26.70,Default,,0000,0000,0000,,and that is what is required,\Nif you look at the question requirements,
Dialogue: 0,0:53:26.70,0:53:29.80,Default,,0000,0000,0000,,prepare the adjusting entries \Nfor the month of June
Dialogue: 0,0:53:29.80,0:53:32.50,Default,,0000,0000,0000,,so this is just for one month.
Dialogue: 0,0:53:32.50,0:53:35.17,Default,,0000,0000,0000,,Prepare the adjusted trial balance
Dialogue: 0,0:53:35.17,0:53:38.42,Default,,0000,0000,0000,,that is prepared after\Nthe adjusting entries
Dialogue: 0,0:53:38.42,0:53:42.03,Default,,0000,0000,0000,,and we will calculate the profit \Nfor the month.
Dialogue: 0,0:53:42.03,0:53:48.05,Default,,0000,0000,0000,,So we will go one by one\Nto see how to prepare this.
Dialogue: 0,0:53:48.05,0:53:53.94,Default,,0000,0000,0000,,And I will detail all of them \Nin this first exercise
Dialogue: 0,0:53:53.94,0:53:58.19,Default,,0000,0000,0000,,and then I will go a bit more quick\Nin the second exercise,
Dialogue: 0,0:53:58.19,0:54:01.45,Default,,0000,0000,0000,,or in the exercise of the workshop.
Dialogue: 0,0:54:01.45,0:54:07.81,Default,,0000,0000,0000,,So the first, supplies on hand \Nat 30th June total 7200.
Dialogue: 0,0:54:08.76,0:54:18.78,Default,,0000,0000,0000,,What this tells you,\Nsupplies on hand total 7200.
Dialogue: 0,0:54:19.43,0:54:25.68,Default,,0000,0000,0000,,Well, if this is the data we have\Nthat means somebody went to the...
Dialogue: 0,0:54:25.68,0:54:29.92,Default,,0000,0000,0000,,To the place that we have the supplies,\Nthey count them,
Dialogue: 0,0:54:29.92,0:54:33.13,Default,,0000,0000,0000,,they value them and at the end \Nthe conclusion is
Dialogue: 0,0:54:33.13,0:54:38.63,Default,,0000,0000,0000,,we have 7200 supplies on hand.\NThat means not used.
Dialogue: 0,0:54:39.46,0:54:44.95,Default,,0000,0000,0000,,How much do we have in our \Nunadjusted trial balance?
Dialogue: 0,0:54:44.95,0:54:52.41,Default,,0000,0000,0000,,So we need to look at here, \Nsupplies. 13,300.
Dialogue: 0,0:54:52.41,0:54:59.07,Default,,0000,0000,0000,,But it says that we have only 7200 so \Nthat means we need to make an adjustment.
Dialogue: 0,0:54:59.47,0:55:04.75,Default,,0000,0000,0000,,We need to reduce this 13,600
Dialogue: 0,0:55:05.24,0:55:09.68,Default,,0000,0000,0000,,and to record an expense,\Na supplies expense for the difference.
Dialogue: 0,0:55:09.71,0:55:18.38,Default,,0000,0000,0000,,So 13600 less 7200 that we have,
Dialogue: 0,0:55:18.38,0:55:21.67,Default,,0000,0000,0000,,that means we have consumed
Dialogue: 0,0:55:21.67,0:55:26.62,Default,,0000,0000,0000,,or used 6400 of supplies,
Dialogue: 0,0:55:26.62,0:55:28.88,Default,,0000,0000,0000,,and that is the adjusting entry.
Dialogue: 0,0:55:28.88,0:55:32.19,Default,,0000,0000,0000,,We need to record the expense for this
Dialogue: 0,0:55:32.19,0:55:37.39,Default,,0000,0000,0000,,so we will have a supplies expense of 6400
Dialogue: 0,0:55:37.39,0:55:43.39,Default,,0000,0000,0000,,and we will credit supplies to reduce\Nthe supplies account.
Dialogue: 0,0:55:43.77,0:55:50.92,Default,,0000,0000,0000,,So here you have the first journal entry,\Nadjusting entry.
Dialogue: 0,0:55:50.92,0:55:58.92,Default,,0000,0000,0000,,Supplies expense debit 6400,\Nand supplies credit 6400.
Dialogue: 0,0:56:00.39,0:56:06.25,Default,,0000,0000,0000,,When you do this and you credit supplies\Nby 6400,
Dialogue: 0,0:56:06.78,0:56:11.75,Default,,0000,0000,0000,,if you remember the ledger accounts\Nwhen we credit one of the ledger accounts
Dialogue: 0,0:56:11.75,0:56:18.01,Default,,0000,0000,0000,,that is supplies, that will decrease \Nthe balance of supplies account
Dialogue: 0,0:56:18.01,0:56:22.86,Default,,0000,0000,0000,,which is 13600,\Nso now the new balance of supplies
Dialogue: 0,0:56:22.86,0:56:31.02,Default,,0000,0000,0000,,is 7200 which is the amount that we \Nreally have in supplies.
Dialogue: 0,0:56:34.73,0:56:38.43,Default,,0000,0000,0000,,Any question on this?
Dialogue: 0,0:56:38.43,0:56:42.41,Default,,0000,0000,0000,,So this is the first adjusting entry.
Dialogue: 0,0:56:42.41,0:56:44.95,Default,,0000,0000,0000,,Yes Natalia, yes please tell me.
Dialogue: 0,0:56:45.03,0:56:49.84,Default,,0000,0000,0000,,NATALIA: Hello Herman,\Nyeah I see...
Dialogue: 0,0:56:49.84,0:56:54.04,Default,,0000,0000,0000,,I print out this, I guess many\Nof us do print out
Dialogue: 0,0:56:54.04,0:56:58.02,Default,,0000,0000,0000,,this worksheet information
Dialogue: 0,0:56:58.02,0:57:04.22,Default,,0000,0000,0000,,of the sample of the questions,\Nand we have ended one,
Dialogue: 0,0:57:04.22,0:57:09.89,Default,,0000,0000,0000,,and last lecture I was asking you \Nto let us print full ones
Dialogue: 0,0:57:09.89,0:57:15.56,Default,,0000,0000,0000,,because it's hard to follow up because \Nour worksheet is empty at the moment,
Dialogue: 0,0:57:15.56,0:57:22.67,Default,,0000,0000,0000,,it means we follow up on the computer\Nbut can't do notes straight on our papers.
Dialogue: 0,0:57:23.04,0:57:27.01,Default,,0000,0000,0000,,Yeah, this will be great because...
Dialogue: 0,0:57:27.01,0:57:33.62,Default,,0000,0000,0000,,HERMAN: Yeah, actually I remember that\Nand at 10 am today,
Dialogue: 0,0:57:33.62,0:57:40.10,Default,,0000,0000,0000,,I uploaded the solution for the lecture \Nexercise and the workshop exercise.
Dialogue: 0,0:57:40.10,0:57:44.72,Default,,0000,0000,0000,,I opened that for you and for everybody,
Dialogue: 0,0:57:44.72,0:57:49.52,Default,,0000,0000,0000,,so you can print them and you can be \Nwith the solutions
Dialogue: 0,0:57:49.52,0:57:53.59,Default,,0000,0000,0000,,and you can follow the solutions\NNATALIA: Ok, now yeah...
Dialogue: 0,0:57:53.59,0:57:57.98,Default,,0000,0000,0000,,You do this adjusting notes \Nmuch in advance
Dialogue: 0,0:57:57.98,0:58:03.24,Default,,0000,0000,0000,,but is it, you can give us indication\Nwhen you do apply the solution
Dialogue: 0,0:58:03.24,0:58:07.84,Default,,0000,0000,0000,,on a regular basis because our paper \Nis usually a couple days before
Dialogue: 0,0:58:07.84,0:58:10.89,Default,,0000,0000,0000,,I print out,\Nand have this, yeah.
Dialogue: 0,0:58:10.89,0:58:16.24,Default,,0000,0000,0000,,HERMAN: I will do that because I agree\Nwith what you asked me last week.
Dialogue: 0,0:58:16.24,0:58:19.77,Default,,0000,0000,0000,,I agree that it's good that \Nyou have the solution
Dialogue: 0,0:58:19.77,0:58:24.47,Default,,0000,0000,0000,,to follow the lecture and the workshop\Nwith the solution so you can take notes
Dialogue: 0,0:58:24.47,0:58:26.90,Default,,0000,0000,0000,,in the solution which will be easier.
Dialogue: 0,0:58:26.90,0:58:34.06,Default,,0000,0000,0000,,That' s why I opened today at 10 am and \NI put an announcement on the blackboard
Dialogue: 0,0:58:34.06,0:58:38.58,Default,,0000,0000,0000,,for all of you to know that they are ready\Nfor you to print,
Dialogue: 0,0:58:38.58,0:58:43.84,Default,,0000,0000,0000,,and I think that is what we talked\Nbecause the idea
Dialogue: 0,0:58:43.84,0:58:48.50,Default,,0000,0000,0000,,is that you try to do this by yourself\Nwithout the solutions,
Dialogue: 0,0:58:48.50,0:58:50.20,Default,,0000,0000,0000,,and that is the main purpose,
Dialogue: 0,0:58:50.20,0:58:53.54,Default,,0000,0000,0000,,that's why I put in the same day \Nof the lecture and workshop.
Dialogue: 0,0:58:53.54,0:58:58.68,Default,,0000,0000,0000,,I will release these only for you \Nto print out and to take that today,
Dialogue: 0,0:58:58.68,0:59:00.67,Default,,0000,0000,0000,,later in workshop.
Dialogue: 0,0:59:00.67,0:59:05.31,Default,,0000,0000,0000,,NATALIA: Ok, and how many it means\Nthey're empty for purpose,
Dialogue: 0,0:59:05.31,0:59:10.21,Default,,0000,0000,0000,,we have a chance to try,\Nand field solution is gonna be
Dialogue: 0,0:59:10.21,0:59:14.53,Default,,0000,0000,0000,,in the very last day before lecture,\Nfor future use.
Dialogue: 0,0:59:14.53,0:59:17.98,Default,,0000,0000,0000,,HERMAN: Yes, I will do that in that way\Nall the time.
Dialogue: 0,0:59:17.98,0:59:21.08,Default,,0000,0000,0000,,So I actually did the two purposes.
Dialogue: 0,0:59:21.08,0:59:24.01,Default,,0000,0000,0000,,One purpose is for you to try \Nwithout solutions,
Dialogue: 0,0:59:24.01,0:59:26.76,Default,,0000,0000,0000,,just with your learning from the videos \Nand PowerPoints,
Dialogue: 0,0:59:26.76,0:59:31.59,Default,,0000,0000,0000,,and second, to have the solutions \Nbefore the lecture and workshop
Dialogue: 0,0:59:31.59,0:59:36.40,Default,,0000,0000,0000,,so you can go through them as well.
Dialogue: 0,0:59:38.03,0:59:44.24,Default,,0000,0000,0000,,Ok, good. \NExcellent Natalia, thank you.
Dialogue: 0,0:59:44.68,0:59:48.37,Default,,0000,0000,0000,,Now we can go to the second one.
Dialogue: 0,0:59:51.86,0:59:58.86,Default,,0000,0000,0000,,The second says an electricity bill \Nfor 1200 has not been recorded
Dialogue: 0,0:59:58.86,1:00:04.91,Default,,0000,0000,0000,,and will not be paid until next month,\Nso what does this description mean?
Dialogue: 0,1:00:04.91,1:00:09.71,Default,,0000,0000,0000,,If the company receives an electricity \Nbill for 1200,
Dialogue: 0,1:00:09.71,1:00:14.56,Default,,0000,0000,0000,,it means that they used, \Nthey consumed electricity for this amount.
Dialogue: 0,1:00:14.56,1:00:17.13,Default,,0000,0000,0000,,It is already consumed therefore \Nit is an expense,
Dialogue: 0,1:00:17.13,1:00:18.86,Default,,0000,0000,0000,,but has not been recorded.
Dialogue: 0,1:00:18.86,1:00:21.93,Default,,0000,0000,0000,,So the only thing, \Nthis is a simple adjusting entry,
Dialogue: 0,1:00:21.93,1:00:26.34,Default,,0000,0000,0000,,the only thing that we need to do \Nis to record the expense,
Dialogue: 0,1:00:26.34,1:00:32.75,Default,,0000,0000,0000,,so we will have electricity expense, 1200,\Nbut because it was not paid this month,
Dialogue: 0,1:00:32.75,1:00:37.57,Default,,0000,0000,0000,,next month will be paid,\Nso we will credit a liability
Dialogue: 0,1:00:37.57,1:00:43.91,Default,,0000,0000,0000,,which is electricity payable,\Nand that is what you have here.
Dialogue: 0,1:00:44.06,1:00:48.06,Default,,0000,0000,0000,,So in this adjusting entry \Nwe will record
Dialogue: 0,1:00:48.06,1:00:51.83,Default,,0000,0000,0000,,debit electricity expense 1200,
Dialogue: 0,1:00:51.83,1:00:57.36,Default,,0000,0000,0000,,credit electricity payable 1200.\NYes Natalia?
Dialogue: 0,1:01:01.05,1:01:05.83,Default,,0000,0000,0000,,Stella, Stella. I need to put you \Nas a caption here...
Dialogue: 0,1:01:09.99,1:01:11.21,Default,,0000,0000,0000,,Stella.
Dialogue: 0,1:01:20.28,1:01:24.68,Default,,0000,0000,0000,,Give me a second because I need \Nto put the caption here of Stella
Dialogue: 0,1:01:24.68,1:01:30.62,Default,,0000,0000,0000,,but I don't find you in the list,\Nwe have a big list of students.
Dialogue: 0,1:01:42.23,1:01:45.61,Default,,0000,0000,0000,,Near the top, ok?
Dialogue: 0,1:01:46.15,1:01:50.95,Default,,0000,0000,0000,,Ah, there it is. T\NOk, thank you Stella
Dialogue: 0,1:01:56.54,1:02:04.89,Default,,0000,0000,0000,,Ok, yes Jade.\NYou have a question?
Dialogue: 0,1:02:05.38,1:02:06.70,Default,,0000,0000,0000,,JADE: I do, yes.
Dialogue: 0,1:02:06.70,1:02:11.81,Default,,0000,0000,0000,,I put there instead of electricity payable\NI put accounts payable.
Dialogue: 0,1:02:11.81,1:02:15.22,Default,,0000,0000,0000,,would that be okay or is that a problem?
Dialogue: 0,1:02:15.22,1:02:17.55,Default,,0000,0000,0000,,HERMAN: It is ok.
Dialogue: 0,1:02:18.60,1:02:23.46,Default,,0000,0000,0000,,If we are very strict in that
Dialogue: 0,1:02:23.46,1:02:27.86,Default,,0000,0000,0000,,which is not the case because accounts \Npayable is reasonable to use this.
Dialogue: 0,1:02:27.86,1:02:33.80,Default,,0000,0000,0000,,When we talk about accounts payable,\NIt's the accounts payable to suppliers,
Dialogue: 0,1:02:33.80,1:02:40.63,Default,,0000,0000,0000,,so we always link accounts payable\Nfor the amount that we owe to suppliers.
Dialogue: 0,1:02:40.63,1:02:45.64,Default,,0000,0000,0000,,That's why it's better, \NI would not consider it wrong
Dialogue: 0,1:02:45.64,1:02:50.88,Default,,0000,0000,0000,,but it's better to put this explicitly\Nelectricity payable because this is...
Dialogue: 0,1:02:50.88,1:02:58.37,Default,,0000,0000,0000,,These are utilities that the company \Nreceived,
Dialogue: 0,1:02:58.37,1:03:01.82,Default,,0000,0000,0000,,so electricity or water \Nor that type of thing.
Dialogue: 0,1:03:01.82,1:03:05.59,Default,,0000,0000,0000,,So I would prefer to put separated \Nfrom accounts payable
Dialogue: 0,1:03:05.59,1:03:11.40,Default,,0000,0000,0000,,just because the concept of accounts \Npayable is linked to suppliers of produce.
Dialogue: 0,1:03:11.40,1:03:16.26,Default,,0000,0000,0000,,Ok? But it's not wrong.
Dialogue: 0,1:03:16.26,1:03:21.71,Default,,0000,0000,0000,,Ok, any other question for the second...
Dialogue: 0,1:03:21.71,1:03:25.99,Default,,0000,0000,0000,,for the second adjusting entry?
Dialogue: 0,1:03:29.30,1:03:33.84,Default,,0000,0000,0000,,So we'll go through the third \Nadjusting entry.
Dialogue: 0,1:03:34.26,1:03:40.38,Default,,0000,0000,0000,,Insurance policy, here you can see \None statement that didn't say anything,
Dialogue: 0,1:03:40.38,1:03:43.98,Default,,0000,0000,0000,,and you cannot do anything unless \Nyou go to the data
Dialogue: 0,1:03:43.98,1:03:48.20,Default,,0000,0000,0000,,that is in the unadjusted trial balance.
Dialogue: 0,1:03:48.20,1:03:54.35,Default,,0000,0000,0000,,The statement says the insurance policy \Nis for a year commencing 1st May 2019.
Dialogue: 0,1:03:54.35,1:03:58.21,Default,,0000,0000,0000,,Well, this is all what you need to\Nprepare the adjusting entries,
Dialogue: 0,1:03:58.21,1:04:00.98,Default,,0000,0000,0000,,because you have the unadjusted \Ntrial balance.
Dialogue: 0,1:04:00.98,1:04:06.03,Default,,0000,0000,0000,,The only information here is that the \Ninsurance policy is for one year,
Dialogue: 0,1:04:06.03,1:04:09.53,Default,,0000,0000,0000,,12 months, and starts on 1st May 2019,
Dialogue: 0,1:04:09.53,1:04:15.49,Default,,0000,0000,0000,,so we will see what is the information \Nwe have in the unadjusted trial balance.
Dialogue: 0,1:04:15.49,1:04:21.17,Default,,0000,0000,0000,,First, this company started \Non 1st May 2019
Dialogue: 0,1:04:21.17,1:04:25.17,Default,,0000,0000,0000,,which is the same day \Nof the insurance policy, ok?
Dialogue: 0,1:04:25.17,1:04:28.74,Default,,0000,0000,0000,,Insurance policy is added 1st May 2019.
Dialogue: 0,1:04:28.74,1:04:34.92,Default,,0000,0000,0000,,And the trial balance is at June 30.
Dialogue: 0,1:04:37.12,1:04:42.60,Default,,0000,0000,0000,,What is the prepaid insurance?\N9600.
Dialogue: 0,1:04:43.14,1:04:51.06,Default,,0000,0000,0000,,9600, this is for 12 months, \Nso how much is per month?
Dialogue: 0,1:04:52.04,1:04:56.90,Default,,0000,0000,0000,,It is 800, so this is equal, ok,
Dialogue: 0,1:04:56.90,1:05:03.36,Default,,0000,0000,0000,,800. \N800 per month.
Dialogue: 0,1:05:05.96,1:05:11.12,Default,,0000,0000,0000,,800 per month.\NSorry for my numbers, I'm not very good.
Dialogue: 0,1:05:12.94,1:05:18.37,Default,,0000,0000,0000,,So 800 is the insurance expense\Nthat how much we use
Dialogue: 0,1:05:18.70,1:05:23.36,Default,,0000,0000,0000,,or consume of this policy per month.\N800 per month.
Dialogue: 0,1:05:23.36,1:05:30.08,Default,,0000,0000,0000,,Now how many months between \N1st May until 30th June?
Dialogue: 0,1:05:31.62,1:05:34.22,Default,,0000,0000,0000,,Two months, exactly.\NTwo months.
Dialogue: 0,1:05:34.45,1:05:38.61,Default,,0000,0000,0000,,So what will be the expense \Nthat we have to recognize
Dialogue: 0,1:05:38.61,1:05:42.90,Default,,0000,0000,0000,,or to record on the 30th of June?
Dialogue: 0,1:05:42.90,1:05:47.11,Default,,0000,0000,0000,,The expense for two months, \Nthat means 1600.
Dialogue: 0,1:05:47.69,1:05:51.78,Default,,0000,0000,0000,,That should be a debit \Nin insurance expense,
Dialogue: 0,1:05:51.78,1:05:57.75,Default,,0000,0000,0000,,and a credit to prepaid insurance\Nto reduce this 9600
Dialogue: 0,1:05:57.75,1:06:02.82,Default,,0000,0000,0000,,because we already consumed 1600\Nof insurance.
Dialogue: 0,1:06:02.82,1:06:10.22,Default,,0000,0000,0000,,So the journal entry, \Nthe adjusting entry for this will be
Dialogue: 0,1:06:10.22,1:06:19.78,Default,,0000,0000,0000,,debit insurance expense 1600,\Ncredit prepaid insurance 1600.
Dialogue: 0,1:06:22.80,1:06:25.50,Default,,0000,0000,0000,,Ok, any question on this?
Dialogue: 0,1:06:30.49,1:06:35.12,Default,,0000,0000,0000,,Ok, so we can have a look at the...\NThank you Jade.
Dialogue: 0,1:06:36.07,1:06:42.16,Default,,0000,0000,0000,,We can have a look at the next one.\NSalaries, sorry, not salaries.
Dialogue: 0,1:06:42.16,1:06:44.34,Default,,0000,0000,0000,,That is the next one.
Dialogue: 0,1:06:44.49,1:06:49.28,Default,,0000,0000,0000,,Number four, services were \Nperformed during the period
Dialogue: 0,1:06:49.28,1:06:54.68,Default,,0000,0000,0000,,in relation to $3000 \Nof revenue in advance.
Dialogue: 0,1:06:56.69,1:07:00.29,Default,,0000,0000,0000,,What does this description tell us?
Dialogue: 0,1:07:00.47,1:07:06.70,Default,,0000,0000,0000,,First the description is telling us that \Nwe received revenue in advance,
Dialogue: 0,1:07:06.70,1:07:09.74,Default,,0000,0000,0000,,that mean we received a payment \Nin advance
Dialogue: 0,1:07:09.74,1:07:16.43,Default,,0000,0000,0000,,and now in this period we provide services\Nfor 3000 of that payment.
Dialogue: 0,1:07:16.77,1:07:22.37,Default,,0000,0000,0000,,We need to link this with how much \Nwe have in revenue received in advance
Dialogue: 0,1:07:22.37,1:07:27.69,Default,,0000,0000,0000,,in the unadjusted trial balance\Nso we will have a look.
Dialogue: 0,1:07:27.69,1:07:35.84,Default,,0000,0000,0000,,The unadjusted trial balance, state this \Nrevenue received in advance, 4800.
Dialogue: 0,1:07:35.84,1:07:42.44,Default,,0000,0000,0000,,Debit because we received this amount\Nand we didn't provide the services
Dialogue: 0,1:07:42.44,1:07:47.95,Default,,0000,0000,0000,,so we have an obligation to provide them\Nand therefore it is a liability, ok?
Dialogue: 0,1:07:47.95,1:07:52.08,Default,,0000,0000,0000,,Now we provide services for 3000 \Nof this 4800,
Dialogue: 0,1:07:52.08,1:07:59.27,Default,,0000,0000,0000,,so we need to record a decrease in service\Nrevenue received in advance,
Dialogue: 0,1:07:59.27,1:08:06.08,Default,,0000,0000,0000,,that means we debit 3000 in this account\Nand we will have the current balance
Dialogue: 0,1:08:06.08,1:08:07.94,Default,,0000,0000,0000,,of all these accounts,
Dialogue: 0,1:08:07.94,1:08:11.34,Default,,0000,0000,0000,,so we debit 3000 in service revenue \Nreceived in advance
Dialogue: 0,1:08:11.34,1:08:14.76,Default,,0000,0000,0000,,and we will have a credit in service
Dialogue: 0,1:08:14.76,1:08:19.21,Default,,0000,0000,0000,,because we earned already this revenue.
Dialogue: 0,1:08:19.21,1:08:23.17,Default,,0000,0000,0000,,We provided the service.\NYes Jade?
Dialogue: 0,1:08:24.92,1:08:30.74,Default,,0000,0000,0000,,JADE: Is this classified as an adjustment\Nor is it just as a mistransaction?
Dialogue: 0,1:08:30.74,1:08:35.63,Default,,0000,0000,0000,,HERMAN: It's an adjustment because \Nthe original transaction
Dialogue: 0,1:08:35.63,1:08:40.30,Default,,0000,0000,0000,,that we already recorded, it is here\Nin the unadjusted trial balance.
Dialogue: 0,1:08:40.30,1:08:43.73,Default,,0000,0000,0000,,What was the original transaction?
Dialogue: 0,1:08:44.22,1:08:49.76,Default,,0000,0000,0000,,When this happens, the service revenue\Nreceived in advance I will write here, ok?
Dialogue: 0,1:08:50.24,1:08:55.97,Default,,0000,0000,0000,,We have debit cash because \Nwe received the payment, ok?
Dialogue: 0,1:08:56.40,1:08:59.20,Default,,0000,0000,0000,,That was in the previous period.
Dialogue: 0,1:08:59.20,1:09:06.06,Default,,0000,0000,0000,,We record cash for 4800.\NSorry for the numbers.
Dialogue: 0,1:09:07.05,1:09:13.35,Default,,0000,0000,0000,,So 4800. We debit cash,\Nand we credit, ok?
Dialogue: 0,1:09:13.35,1:09:19.98,Default,,0000,0000,0000,,This revenue received in advance,\NI will put it just like that.
Dialogue: 0,1:09:19.98,1:09:24.94,Default,,0000,0000,0000,,Revenue received in advance \Nwe credit 4800.
Dialogue: 0,1:09:24.94,1:09:29.01,Default,,0000,0000,0000,,This is the normal journal entry. \NThis is the normal transaction
Dialogue: 0,1:09:29.01,1:09:34.90,Default,,0000,0000,0000,,that we recorded in the last period,\Nand that's why when you look at this entry
Dialogue: 0,1:09:34.90,1:09:41.69,Default,,0000,0000,0000,,and we post the accounts in the ledger,\Nthis is what we have there, ok?
Dialogue: 0,1:09:42.79,1:09:45.52,Default,,0000,0000,0000,,That is the original transaction.
Dialogue: 0,1:09:45.52,1:09:50.08,Default,,0000,0000,0000,,What happens now is that \Nwe just provide services.
Dialogue: 0,1:09:50.42,1:09:54.52,Default,,0000,0000,0000,,Of course we didn't receive more money\Nbecause already we were paid in advance
Dialogue: 0,1:09:54.52,1:10:00.41,Default,,0000,0000,0000,,but we provide the service \Nso we need to decrease this
Dialogue: 0,1:10:00.41,1:10:05.19,Default,,0000,0000,0000,,obligation or liability\Nfor the 3000 already provided.
Dialogue: 0,1:10:09.72,1:10:15.70,Default,,0000,0000,0000,,Well, George, it says because the concept\Nof revenue received in advance,
Dialogue: 0,1:10:16.29,1:10:20.88,Default,,0000,0000,0000,,the concept of that account \Nis that we received cash in advance.
Dialogue: 0,1:10:20.88,1:10:24.73,Default,,0000,0000,0000,,That is what we received in advance,\Ncash, the payment,
Dialogue: 0,1:10:25.12,1:10:29.78,Default,,0000,0000,0000,,so if you look at the description,
Dialogue: 0,1:10:31.63,1:10:34.16,Default,,0000,0000,0000,,services were performed \Nduring the period
Dialogue: 0,1:10:34.16,1:10:37.54,Default,,0000,0000,0000,,in relation to.\NIn relation to what?
Dialogue: 0,1:10:37.54,1:10:41.42,Default,,0000,0000,0000,,To revenue received in advance.
Dialogue: 0,1:10:41.46,1:10:45.38,Default,,0000,0000,0000,,If you look at this description,\Nrevenue received in advance,
Dialogue: 0,1:10:45.38,1:10:51.24,Default,,0000,0000,0000,,what it means is that the company \Nreceived cash in advance
Dialogue: 0,1:10:51.48,1:10:53.50,Default,,0000,0000,0000,,to provide the services.
Dialogue: 0,1:10:53.53,1:10:58.99,Default,,0000,0000,0000,,The customer paid before we provide \Nthe service to the customer.
Dialogue: 0,1:10:58.99,1:11:03.49,Default,,0000,0000,0000,,Ok, so cash was involved\Nin the original transaction
Dialogue: 0,1:11:03.49,1:11:08.69,Default,,0000,0000,0000,,and that is the transaction that \NI showed you that I prepared,
Dialogue: 0,1:11:08.69,1:11:13.36,Default,,0000,0000,0000,,so how was it recorded the cash received?
Dialogue: 0,1:11:13.36,1:11:19.58,Default,,0000,0000,0000,,We debit cash and we credit revenue \Nreceived in advance from 4800,
Dialogue: 0,1:11:19.58,1:11:22.86,Default,,0000,0000,0000,,that was the original transaction,\Nit's not for this period,
Dialogue: 0,1:11:22.86,1:11:28.65,Default,,0000,0000,0000,,that was before the 30th of June\Nand that's why we have in the balance,
Dialogue: 0,1:11:28.65,1:11:31.30,Default,,0000,0000,0000,,on 30th June we have that amount.
Dialogue: 0,1:11:31.30,1:11:36.78,Default,,0000,0000,0000,,Now in this period the adjusting entry\Nat the end of the period,
Dialogue: 0,1:11:36.78,1:11:42.31,Default,,0000,0000,0000,,we need to include how much \Nwe provide of services.
Dialogue: 0,1:11:42.31,1:11:46.70,Default,,0000,0000,0000,,And we provide 3000 of this 4800.
Dialogue: 0,1:11:46.70,1:11:51.75,Default,,0000,0000,0000,,So because we provide services, \Nnow we can record the service revenue,
Dialogue: 0,1:11:51.75,1:11:56.55,Default,,0000,0000,0000,,it's a credit service revenue,\Nand we decrease the obligation.
Dialogue: 0,1:11:56.55,1:12:03.81,Default,,0000,0000,0000,,To put the things in context,\Nhere we are in the month of June.
Dialogue: 0,1:12:04.82,1:12:10.13,Default,,0000,0000,0000,,So in June the unadjusted trial balance\Nis for June.
Dialogue: 0,1:12:14.40,1:12:19.94,Default,,0000,0000,0000,,I will go through the depreciation\Nbut do not change them...
Dialogue: 0,1:12:20.19,1:12:24.06,Default,,0000,0000,0000,,I will go through them,\Nbut here... Ok.
Dialogue: 0,1:12:24.72,1:12:27.60,Default,,0000,0000,0000,,This is the unadjusted...
Dialogue: 0,1:12:28.93,1:12:31.25,Default,,0000,0000,0000,,I am clear now, excellent Ann.
Dialogue: 0,1:12:31.28,1:12:37.29,Default,,0000,0000,0000,,This is the unadjusted trial balance\Nat 30th June.
Dialogue: 0,1:12:37.29,1:12:42.29,Default,,0000,0000,0000,,Here means that before 30th June\Nwe received the cash.
Dialogue: 0,1:12:42.29,1:12:47.66,Default,,0000,0000,0000,,Now in the adjusting entry it means that\Nalso during this period before 30th June
Dialogue: 0,1:12:47.66,1:12:55.71,Default,,0000,0000,0000,,we provide 3000 of this 4800,\Nservices provided, ok?
Dialogue: 0,1:12:57.48,1:13:00.75,Default,,0000,0000,0000,,Does this answer your question George?
Dialogue: 0,1:13:06.41,1:13:12.16,Default,,0000,0000,0000,,Ok, excellent, good.\NSo we can go through the next one.
Dialogue: 0,1:13:16.05,1:13:17.90,Default,,0000,0000,0000,,I am here...
Dialogue: 0,1:13:17.92,1:13:25.19,Default,,0000,0000,0000,,The next one is quite simple because \Nsalaries, 6400 are owed on 30th June.
Dialogue: 0,1:13:26.42,1:13:29.67,Default,,0000,0000,0000,,What does this mean?\NSalaries owed means that
Dialogue: 0,1:13:29.67,1:13:36.86,Default,,0000,0000,0000,,the employees worked,\Nso we already consumed these results.
Dialogue: 0,1:13:36.86,1:13:44.88,Default,,0000,0000,0000,,The work of our employees and therefore\Nwe should record a salaries expense.
Dialogue: 0,1:13:44.88,1:13:48.05,Default,,0000,0000,0000,,But they are owed, \Nthat means we have not paid them,
Dialogue: 0,1:13:48.05,1:13:55.20,Default,,0000,0000,0000,,and that's why we did not record this as a\Ntransaction like you learned last week.
Dialogue: 0,1:13:55.20,1:14:00.27,Default,,0000,0000,0000,,We need to prepare the adjusting entry,\Nso we need to record the pays,
Dialogue: 0,1:14:00.27,1:14:06.19,Default,,0000,0000,0000,,salaries expense 6400 debit, \Nand a salaries payable
Dialogue: 0,1:14:06.19,1:14:10.64,Default,,0000,0000,0000,,because it's owed at the end of the month\Nso it will be salaries expense
Dialogue: 0,1:14:10.64,1:14:17.13,Default,,0000,0000,0000,,and salaries payable.
Dialogue: 0,1:14:17.13,1:14:23.40,Default,,0000,0000,0000,,Here you have debit salaries \Nexpense 6400
Dialogue: 0,1:14:23.40,1:14:27.07,Default,,0000,0000,0000,,credits salaries payable 6400, ok?
Dialogue: 0,1:14:28.09,1:14:30.75,Default,,0000,0000,0000,,That I think is simple.
Dialogue: 0,1:14:33.51,1:14:36.38,Default,,0000,0000,0000,,Then we have the number six.
Dialogue: 0,1:14:37.12,1:14:41.25,Default,,0000,0000,0000,,Office equipment has a five year life\Nwith no resale value,
Dialogue: 0,1:14:41.25,1:14:48.00,Default,,0000,0000,0000,,and is being depreciated at \N$1440 per month for 60 months.
Dialogue: 0,1:14:48.00,1:14:54.96,Default,,0000,0000,0000,,In this description they are telling you\Nhow much is the expense, ok?
Dialogue: 0,1:14:55.49,1:15:02.00,Default,,0000,0000,0000,,But if it is not, if it is only they said\Nthe office equipment has a five year life
Dialogue: 0,1:15:02.00,1:15:07.14,Default,,0000,0000,0000,,with no resale value depreciated using\Nthe straight line method,
Dialogue: 0,1:15:07.14,1:15:13.71,Default,,0000,0000,0000,,you will learn this in another lecture\Nthe depreciation for 60 months.
Dialogue: 0,1:15:13.71,1:15:20.23,Default,,0000,0000,0000,,If we do not have the amounts, you can\Njust go to the unadjusted trial balance
Dialogue: 0,1:15:20.23,1:15:27.33,Default,,0000,0000,0000,,look at the office equipment account,\N86400.
Dialogue: 0,1:15:28.78,1:15:31.92,Default,,0000,0000,0000,,If you divide this by 60,
Dialogue: 0,1:15:31.92,1:15:37.51,Default,,0000,0000,0000,,you will have exactly 1440 per month, ok?
Dialogue: 0,1:15:38.28,1:15:42.24,Default,,0000,0000,0000,,So that is the depreciation expense.
Dialogue: 0,1:15:42.24,1:15:45.98,Default,,0000,0000,0000,,Yes, a couple of work, I will not go in\Ndeep in this topic
Dialogue: 0,1:15:45.98,1:15:49.51,Default,,0000,0000,0000,,because there is a whole topic \Nabout depreciation.
Dialogue: 0,1:15:49.51,1:15:54.60,Default,,0000,0000,0000,,Yeah, I will go why credit and...
Dialogue: 0,1:15:54.79,1:15:59.72,Default,,0000,0000,0000,,Ok, you let me finish this part \Nand I will answer the question
Dialogue: 0,1:15:59.72,1:16:01.97,Default,,0000,0000,0000,,of the previous one.
Dialogue: 0,1:16:02.59,1:16:07.56,Default,,0000,0000,0000,,So we had this depreciation,
Dialogue: 0,1:16:07.56,1:16:09.90,Default,,0000,0000,0000,,what does depreciation mean?
Dialogue: 0,1:16:10.46,1:16:14.42,Default,,0000,0000,0000,,When we purchase an equipment like this, \Noffice equipment,
Dialogue: 0,1:16:14.42,1:16:19.11,Default,,0000,0000,0000,,and we pay a big amount of money,\Nin this case how much we paid
Dialogue: 0,1:16:19.11,1:16:24.77,Default,,0000,0000,0000,,for this office equipment,\Nit was 86400, ok?
Dialogue: 0,1:16:25.68,1:16:32.76,Default,,0000,0000,0000,,Do you think we can put as an expense\N86400 in the first month?
Dialogue: 0,1:16:32.76,1:16:40.17,Default,,0000,0000,0000,,Well, of course not because we will use\Nthis equipment during 60 months,
Dialogue: 0,1:16:40.17,1:16:46.79,Default,,0000,0000,0000,,and remember an expense \Nis when we use
Dialogue: 0,1:16:46.79,1:16:48.69,Default,,0000,0000,0000,,or consume resources.
Dialogue: 0,1:16:48.69,1:16:52.74,Default,,0000,0000,0000,,This resource that is 86400,
Dialogue: 0,1:16:52.74,1:16:58.17,Default,,0000,0000,0000,,it will be consumed or used \Nduring 60 months
Dialogue: 0,1:16:58.17,1:17:04.94,Default,,0000,0000,0000,,so we need to calculate how much of this\Nwe use in one month,
Dialogue: 0,1:17:06.03,1:17:07.99,Default,,0000,0000,0000,,or in two months in this case.
Dialogue: 0,1:17:07.99,1:17:11.98,Default,,0000,0000,0000,,In two months because it's from \N1st of May till 30th June.
Dialogue: 0,1:17:11.98,1:17:18.66,Default,,0000,0000,0000,,How much we use of this in two months,\Nok? Two months.
Dialogue: 0,1:17:19.61,1:17:23.97,Default,,0000,0000,0000,,So we divide this by 60, \Nwe multiply by two,
Dialogue: 0,1:17:23.97,1:17:28.66,Default,,0000,0000,0000,,and that will be 2880
Dialogue: 0,1:17:28.66,1:17:34.99,Default,,0000,0000,0000,,because per month is 1440 \Nwhen you divide by 60,
Dialogue: 0,1:17:34.99,1:17:37.56,Default,,0000,0000,0000,,you multiply by two because \Nit's two months
Dialogue: 0,1:17:37.56,1:17:39.47,Default,,0000,0000,0000,,and now we can record the expense.
Dialogue: 0,1:17:39.47,1:17:45.39,Default,,0000,0000,0000,,The name of this expense\Nis depreciation expense,
Dialogue: 0,1:17:45.59,1:17:51.62,Default,,0000,0000,0000,,so we record debit depreciation expense.\NWhat is the other account?
Dialogue: 0,1:17:52.42,1:17:58.61,Default,,0000,0000,0000,,Well the other account will be to decrease\Nthis account,
Dialogue: 0,1:17:58.61,1:17:59.59,Default,,0000,0000,0000,,office equipment,
Dialogue: 0,1:17:59.59,1:18:02.78,Default,,0000,0000,0000,,so you can say well, \Nwe credit office equipment.
Dialogue: 0,1:18:02.78,1:18:07.89,Default,,0000,0000,0000,,That would be the case that we are doing \Nin all of these accounts,
Dialogue: 0,1:18:07.89,1:18:10.63,Default,,0000,0000,0000,,but in the case of non-current assets
Dialogue: 0,1:18:10.63,1:18:16.40,Default,,0000,0000,0000,,we use what we call a contra asset account
Dialogue: 0,1:18:16.40,1:18:20.14,Default,,0000,0000,0000,,that means we keep separated \Nthe decrease of this account
Dialogue: 0,1:18:20.14,1:18:24.49,Default,,0000,0000,0000,,and the name of that account\Nis accumulated depreciation.
Dialogue: 0,1:18:25.40,1:18:29.55,Default,,0000,0000,0000,,The effect is the same as you reduce\Ndirectly office equipment,
Dialogue: 0,1:18:29.55,1:18:34.07,Default,,0000,0000,0000,,you credit office equipment\Nbut in non-current assets like this,
Dialogue: 0,1:18:34.07,1:18:37.06,Default,,0000,0000,0000,,this is a topic that we will explore\Nin detail,
Dialogue: 0,1:18:37.06,1:18:44.80,Default,,0000,0000,0000,,we use another account and the name is\Nthe accumulated depreciation.
Dialogue: 0,1:18:45.58,1:18:50.00,Default,,0000,0000,0000,,It's an asset account \Nbut with a credit entry.
Dialogue: 0,1:18:50.00,1:18:55.55,Default,,0000,0000,0000,,So the adjusting entry for this
Dialogue: 0,1:18:55.55,1:19:02.48,Default,,0000,0000,0000,,will be depreciation expense\Ndebit 2880
Dialogue: 0,1:19:02.48,1:19:11.43,Default,,0000,0000,0000,,and we credit accumulated depreciation\Noffice equipment, ok, 2880.
Dialogue: 0,1:19:15.62,1:19:17.87,Default,,0000,0000,0000,,Any question on this?
Dialogue: 0,1:19:25.58,1:19:29.55,Default,,0000,0000,0000,,Ok, the last one.
Dialogue: 0,1:19:36.17,1:19:42.86,Default,,0000,0000,0000,,The last one is number seven,\Ninvoices representing
Dialogue: 0,1:19:42.86,1:19:44.61,Default,,0000,0000,0000,,Ah, Tablynn...
Dialogue: 0,1:19:44.68,1:19:50.67,Default,,0000,0000,0000,,Ah, ok. Before we go to the seven
Dialogue: 0,1:19:51.24,1:19:53.62,Default,,0000,0000,0000,,there is a question about the salaries
Dialogue: 0,1:19:53.62,1:19:59.38,Default,,0000,0000,0000,,who asked me that question \Nabout the salaries?
Dialogue: 0,1:20:00.30,1:20:04.51,Default,,0000,0000,0000,,Omar who did, in the adjusted trial, ok.
Dialogue: 0,1:20:04.65,1:20:09.49,Default,,0000,0000,0000,,I will try to answer the two questions.
Dialogue: 0,1:20:09.49,1:20:17.23,Default,,0000,0000,0000,,First, Trina has a question, why \Nto credit 6400 in the transaction five?
Dialogue: 0,1:20:17.23,1:20:22.25,Default,,0000,0000,0000,,Why to credit? \NIsn't it debit when they pay 6400?
Dialogue: 0,1:20:22.25,1:20:29.98,Default,,0000,0000,0000,,Well, remember Trina that we, in any \Njournal entry and also adjusting entry,
Dialogue: 0,1:20:29.98,1:20:33.31,Default,,0000,0000,0000,,we have a debit side and a credit side.
Dialogue: 0,1:20:33.31,1:20:37.62,Default,,0000,0000,0000,,The total debit should be always equal \Nto total credit.
Dialogue: 0,1:20:37.62,1:20:43.67,Default,,0000,0000,0000,,So what is the debit and what is \Nthe credit in the 6400 that you have here
Dialogue: 0,1:20:43.67,1:20:46.40,Default,,0000,0000,0000,,in transaction five?
Dialogue: 0,1:20:46.40,1:20:52.40,Default,,0000,0000,0000,,Salaries of 6400 are owed at that time,\N30th June.
Dialogue: 0,1:20:52.82,1:20:58.37,Default,,0000,0000,0000,,So we have an expense, \Nand the expense is a debit entry, ok?
Dialogue: 0,1:20:58.99,1:21:03.26,Default,,0000,0000,0000,,The salaries expense it will be debit.
Dialogue: 0,1:21:03.26,1:21:07.42,Default,,0000,0000,0000,,And we have a salaries payable because\Nthey were not paid,
Dialogue: 0,1:21:07.42,1:21:09.96,Default,,0000,0000,0000,,they are owed at 30th June.
Dialogue: 0,1:21:09.96,1:21:15.23,Default,,0000,0000,0000,,So the salaries payable, the liability\Nwill be the credit entry.
Dialogue: 0,1:21:15.73,1:21:21.35,Default,,0000,0000,0000,,So your question is why credit?\NWell, we credit the liability account,
Dialogue: 0,1:21:21.35,1:21:27.64,Default,,0000,0000,0000,,that means salaries payable,\Nbut we debit the salaries.
Dialogue: 0,1:21:27.64,1:21:32.37,Default,,0000,0000,0000,,What happens when we pay them in \Nthe next period?
Dialogue: 0,1:21:32.37,1:21:40.00,Default,,0000,0000,0000,,When we pay the salaries we will\Ndebit the salaries payable,
Dialogue: 0,1:21:40.00,1:21:45.66,Default,,0000,0000,0000,,so we decrease this liability,\Nand we will credit cash, ok?
Dialogue: 0,1:21:45.66,1:21:48.37,Default,,0000,0000,0000,,That is what happened in \Nthe following period,
Dialogue: 0,1:21:48.37,1:21:54.46,Default,,0000,0000,0000,,not in this one.\NAnd Tablynn...
Dialogue: 0,1:21:55.17,1:21:59.02,Default,,0000,0000,0000,,Tablynn you asked a question \Nabout the depreciation?
Dialogue: 0,1:21:59.02,1:22:01.58,Default,,0000,0000,0000,,Yes, depreciation, well,
Dialogue: 0,1:22:01.58,1:22:07.84,Default,,0000,0000,0000,,this is the concept that \Nwe will have in detail,
Dialogue: 0,1:22:08.22,1:22:10.91,Default,,0000,0000,0000,,there is a whole lecture about \Ndepreciation
Dialogue: 0,1:22:10.91,1:22:14.26,Default,,0000,0000,0000,,with different methods of depreciation\Nbut for now,
Dialogue: 0,1:22:14.26,1:22:20.36,Default,,0000,0000,0000,,we only need to think in the concept \Nof depreciation, the general concept.
Dialogue: 0,1:22:20.36,1:22:25.94,Default,,0000,0000,0000,,When we purchase an equipment\Nthat lasts more than one accounting period
Dialogue: 0,1:22:25.94,1:22:31.13,Default,,0000,0000,0000,,we cannot record as an expense\Nthe cost of the equipment
Dialogue: 0,1:22:31.13,1:22:35.02,Default,,0000,0000,0000,,because we will use the equipment\Nfor a number of periods,
Dialogue: 0,1:22:35.02,1:22:38.76,Default,,0000,0000,0000,,so we need to divide the cost of \Nthe equipment
Dialogue: 0,1:22:38.76,1:22:43.05,Default,,0000,0000,0000,,into the number of periods.
Dialogue: 0,1:22:43.05,1:22:47.77,Default,,0000,0000,0000,,So we will have just one part of the cost\Nin each period,
Dialogue: 0,1:22:47.77,1:22:53.00,Default,,0000,0000,0000,,and the easier way is just divide the cost\Nby the number of periods.
Dialogue: 0,1:22:53.00,1:22:59.16,Default,,0000,0000,0000,,So in this case the total amount\Ndivided by 60 months that we will use
Dialogue: 0,1:23:01.38,1:23:06.52,Default,,0000,0000,0000,,this equipment, office equipment,\Nmeans that we will have an expense
Dialogue: 0,1:23:06.74,1:23:13.46,Default,,0000,0000,0000,,of 1440 per month, and we call that,\Nthat expense,
Dialogue: 0,1:23:13.46,1:23:18.45,Default,,0000,0000,0000,,we call that depreciation expense, ok?
Dialogue: 0,1:23:18.45,1:23:21.25,Default,,0000,0000,0000,,That is the name of this account,\Ndepreciation expense.
Dialogue: 0,1:23:21.25,1:23:23.12,Default,,0000,0000,0000,,What does that mean?
Dialogue: 0,1:23:23.12,1:23:28.36,Default,,0000,0000,0000,,It means that that is \Nthe part of the equipment
Dialogue: 0,1:23:28.36,1:23:33.35,Default,,0000,0000,0000,,that has been used \Nor consumed in one period.
Dialogue: 0,1:23:34.34,1:23:37.56,Default,,0000,0000,0000,,And that's why we record that \Nas a debit for each month,
Dialogue: 0,1:23:37.56,1:23:43.15,Default,,0000,0000,0000,,but here we have two months, ok?\NBecause from 1st May until 30th June
Dialogue: 0,1:23:43.15,1:23:46.17,Default,,0000,0000,0000,,which is the time for this exercise,\Ntwo months,
Dialogue: 0,1:23:46.17,1:23:53.74,Default,,0000,0000,0000,,it will be two multiplied by 1440,\Nwhich is 2880.
Dialogue: 0,1:23:53.74,1:24:01.36,Default,,0000,0000,0000,,So we will record depreciation expense,\Ndebit 2880.
Dialogue: 0,1:24:01.74,1:24:03.59,Default,,0000,0000,0000,,What is the other account?
Dialogue: 0,1:24:03.59,1:24:09.66,Default,,0000,0000,0000,,I mentioned that there is another account\Nbut the name is accumulated depreciation,
Dialogue: 0,1:24:09.66,1:24:14.76,Default,,0000,0000,0000,,so we will record a credit \Nin that account.
Dialogue: 0,1:24:17.20,1:24:21.53,Default,,0000,0000,0000,,Ok, I'd asked how much would you deduct\Nfrom depreciation expense
Dialogue: 0,1:24:21.78,1:24:26.62,Default,,0000,0000,0000,,in the adjusted...\NExcellent Tablynn, thank you.
Dialogue: 0,1:24:26.62,1:24:32.08,Default,,0000,0000,0000,,How much would you deduct in the \Nadjusted trial balance?
Dialogue: 0,1:24:32.32,1:24:37.86,Default,,0000,0000,0000,,I will go through that Adash\Nbecause we started with
Dialogue: 0,1:24:37.86,1:24:40.61,Default,,0000,0000,0000,,the unadjusted trial balance.
Dialogue: 0,1:24:40.61,1:24:47.21,Default,,0000,0000,0000,,We are doing the adjustments, and then \NI will explain how we will adjust these
Dialogue: 0,1:24:47.21,1:24:51.07,Default,,0000,0000,0000,,to the adjusted trial balance.
Dialogue: 0,1:24:51.07,1:24:57.68,Default,,0000,0000,0000,,How we transform the unadjusted to the \Nadjusted trial balance.
Dialogue: 0,1:24:57.68,1:25:00.35,Default,,0000,0000,0000,,Ok, yes Trina.
Dialogue: 0,1:25:02.40,1:25:08.06,Default,,0000,0000,0000,,TRINA: Hello, with the salaries,
Dialogue: 0,1:25:08.60,1:25:14.48,Default,,0000,0000,0000,,we already had 6400, \Nit means that expense increased,
Dialogue: 0,1:25:14.48,1:25:20.40,Default,,0000,0000,0000,,that's why expense is debit 6400,\Nbut with the liabilities,
Dialogue: 0,1:25:20.40,1:25:25.66,Default,,0000,0000,0000,,it means that we decrease \Nthe liabilities, is that right?
Dialogue: 0,1:25:25.66,1:25:28.28,Default,,0000,0000,0000,,HERMAN: Yes when (INAUDIBLE)
Dialogue: 0,1:25:28.70,1:25:31.90,Default,,0000,0000,0000,,TRINA: So if we decrease the... \N(CROSSTALK)
Dialogue: 0,1:25:32.41,1:25:37.18,Default,,0000,0000,0000,,Sorry, if we decrease the liabilities,\Nit means it debits liabilities,
Dialogue: 0,1:25:37.18,1:25:38.97,Default,,0000,0000,0000,,is that right?
Dialogue: 0,1:25:39.44,1:25:42.08,Default,,0000,0000,0000,,HERMAN: Yes, when we pay that is \Nanother transaction,
Dialogue: 0,1:25:42.08,1:25:44.07,Default,,0000,0000,0000,,it's not the adjusting entry.
Dialogue: 0,1:25:44.07,1:25:47.96,Default,,0000,0000,0000,,When we pay for the liability,\Nwe will credit the liability
Dialogue: 0,1:25:47.96,1:25:51.62,Default,,0000,0000,0000,,so we decrease the liability,\Nand we will debit cash.
Dialogue: 0,1:25:51.82,1:25:57.41,Default,,0000,0000,0000,,So we decrease cash because we are paying\Nfor that liability.
Dialogue: 0,1:25:57.83,1:25:59.24,Default,,0000,0000,0000,,But that is another (CROSSTALK)
Dialogue: 0,1:25:59.24,1:26:04.64,Default,,0000,0000,0000,,TRINA: yeah, I'm a bit confused because \Nwe decrease the liabilities,
Dialogue: 0,1:26:04.64,1:26:10.72,Default,,0000,0000,0000,,but well you put it credit 6400.
Dialogue: 0,1:26:10.72,1:26:14.48,Default,,0000,0000,0000,,HERMAN: Yeah, well, that is the point.\NTrina it's good that you asked
Dialogue: 0,1:26:14.48,1:26:21.41,Default,,0000,0000,0000,,because we should not confuse two\Ndifferent journal entries, ok?
Dialogue: 0,1:26:21.41,1:26:25.77,Default,,0000,0000,0000,,The journal entry that we're talking \Nin number five here,
Dialogue: 0,1:26:25.77,1:26:28.13,Default,,0000,0000,0000,,is an adjusting entry.
Dialogue: 0,1:26:28.13,1:26:32.07,Default,,0000,0000,0000,,We have not paid anything \Nin this journal entry.
Dialogue: 0,1:26:32.07,1:26:38.46,Default,,0000,0000,0000,,In this transaction, we only recognize\Nthat the employees worked
Dialogue: 0,1:26:38.46,1:26:44.58,Default,,0000,0000,0000,,during the months,\Nhow much we owe them for this work, 6400.
Dialogue: 0,1:26:44.58,1:26:47.34,Default,,0000,0000,0000,,We didn't pay anything.
Dialogue: 0,1:26:47.34,1:26:51.48,Default,,0000,0000,0000,,In the transaction here it doesn't say \Nthat we paid for that.
Dialogue: 0,1:26:51.48,1:26:58.04,Default,,0000,0000,0000,,We owe this amount at 30th June.\NSo what do we record?
Dialogue: 0,1:26:58.04,1:27:03.91,Default,,0000,0000,0000,,We record the expense, \Nthat means debit salaries expense, 6400,
Dialogue: 0,1:27:03.91,1:27:08.63,Default,,0000,0000,0000,,and we record the liability because \Nwe owe them this amount,
Dialogue: 0,1:27:08.63,1:27:15.06,Default,,0000,0000,0000,,so we credit salaries payable, 6400\Nand that's all.
Dialogue: 0,1:27:15.06,1:27:17.44,Default,,0000,0000,0000,,That's all the adjusting entries.
Dialogue: 0,1:27:18.44,1:27:24.51,Default,,0000,0000,0000,,Now in another day, next month,\Nwe will pay for that.
Dialogue: 0,1:27:24.81,1:27:28.80,Default,,0000,0000,0000,,In the payment that is another \Njournal entry, not this one,
Dialogue: 0,1:27:28.80,1:27:32.79,Default,,0000,0000,0000,,when we pay for that what will we do?
Dialogue: 0,1:27:32.79,1:27:36.78,Default,,0000,0000,0000,,We will debit the liability,\Nso we decrease the liability.
Dialogue: 0,1:27:36.78,1:27:43.52,Default,,0000,0000,0000,,We will debit 6400, and we will pay,\Nthat means we will credit cash.
Dialogue: 0,1:27:43.52,1:27:46.16,Default,,0000,0000,0000,,When we credit cash we decrease \Nthe cash account
Dialogue: 0,1:27:46.16,1:27:51.34,Default,,0000,0000,0000,,because we are paying that amount\Nand that is another journal entry
Dialogue: 0,1:27:51.34,1:27:52.96,Default,,0000,0000,0000,,for the next period.
Dialogue: 0,1:27:54.60,1:28:01.57,Default,,0000,0000,0000,,Does this clarify the point Trina?\NGood, excellent.
Dialogue: 0,1:28:03.59,1:28:10.69,Default,,0000,0000,0000,,Ok, we are in the number seven,\Nthe last one.
Dialogue: 0,1:28:11.28,1:28:16.60,Default,,0000,0000,0000,,Invoices representing $8000 of services\Nperformed during the month
Dialogue: 0,1:28:16.60,1:28:22.85,Default,,0000,0000,0000,,have not been recorded as of 30th June,\Nso what does this mean?
Dialogue: 0,1:28:24.80,1:28:30.16,Default,,0000,0000,0000,,We have provided services because \Nit says invoices representing
Dialogue: 0,1:28:30.83,1:28:35.78,Default,,0000,0000,0000,,$8000 of services performed during that,\Nso we performed this service,
Dialogue: 0,1:28:35.78,1:28:39.10,Default,,0000,0000,0000,,and we provided the services \Nfor $8000
Dialogue: 0,1:28:39.10,1:28:42.50,Default,,0000,0000,0000,,but they have not been recorded\Nso we need to record them.
Dialogue: 0,1:28:42.50,1:28:47.11,Default,,0000,0000,0000,,So we need to record \Nan accounts receivable
Dialogue: 0,1:28:47.11,1:28:51.60,Default,,0000,0000,0000,,because it doesn't say anything there\Nthat we received the money,
Dialogue: 0,1:28:51.60,1:28:55.53,Default,,0000,0000,0000,,therefore it is an account receivable,\Nwe will debit...
Dialogue: 0,1:28:55.70,1:28:57.18,Default,,0000,0000,0000,,(CLEARS THROAT)\NSorry.
Dialogue: 0,1:28:57.69,1:29:00.47,Default,,0000,0000,0000,,We will debit the account receivable\Nfor $8000,
Dialogue: 0,1:29:00.47,1:29:05.74,Default,,0000,0000,0000,,and we will credit the service revenue
Dialogue: 0,1:29:05.83,1:29:07.61,Default,,0000,0000,0000,,because we earned from that service,
Dialogue: 0,1:29:07.61,1:29:11.59,Default,,0000,0000,0000,,we already provided the service,\Nso we will credit service revenue.
Dialogue: 0,1:29:11.94,1:29:13.65,Default,,0000,0000,0000,,So what we will have...
Dialogue: 0,1:29:19.48,1:29:21.43,Default,,0000,0000,0000,,I will do that.
Dialogue: 0,1:29:23.47,1:29:28.73,Default,,0000,0000,0000,,What we will have is the \Nlast adjusting entry.
Dialogue: 0,1:29:29.24,1:29:36.09,Default,,0000,0000,0000,,$8000 account receivable debit,\Nand credit $8000 service revenue.
Dialogue: 0,1:29:36.70,1:29:41.35,Default,,0000,0000,0000,,So we've completed \Nall the adjusting entries.
Dialogue: 0,1:29:41.70,1:29:45.80,Default,,0000,0000,0000,,Before we go to how we prepare the \Nadjusted trial balance,
Dialogue: 0,1:29:46.61,1:29:50.88,Default,,0000,0000,0000,,any questions about the adjusting entries?
Dialogue: 0,1:29:57.56,1:30:00.08,Default,,0000,0000,0000,,All good? Ok.
Dialogue: 0,1:30:02.88,1:30:06.79,Default,,0000,0000,0000,,Excellent Jade, very good.\NThat's my purpose.
Dialogue: 0,1:30:06.79,1:30:10.96,Default,,0000,0000,0000,,How we prepare the adjusted trial balance?
Dialogue: 0,1:30:11.14,1:30:16.60,Default,,0000,0000,0000,,Before we prepare that, \Nremember these are journal entries,
Dialogue: 0,1:30:16.60,1:30:20.40,Default,,0000,0000,0000,,so the name is adjusted journal entries,\Nthey are journal entries,
Dialogue: 0,1:30:20.40,1:30:26.62,Default,,0000,0000,0000,,so after you prepare the adjusting entries\Nwhat is the next step?
Dialogue: 0,1:30:26.62,1:30:30.47,Default,,0000,0000,0000,,You need to post these entries\Nto the ledger.
Dialogue: 0,1:30:30.47,1:30:33.58,Default,,0000,0000,0000,,The same as we did last week,\Nexactly Joshua,
Dialogue: 0,1:30:33.58,1:30:38.58,Default,,0000,0000,0000,,we need to post them to the ledger, \Nall of them to adjust the balance
Dialogue: 0,1:30:38.58,1:30:40.69,Default,,0000,0000,0000,,of each of these accounts.
Dialogue: 0,1:30:40.69,1:30:44.59,Default,,0000,0000,0000,,We will not do that, ok?\NYou already learnt last week
Dialogue: 0,1:30:44.59,1:30:48.46,Default,,0000,0000,0000,,how to post transactions from the journal \Nto the ledger,
Dialogue: 0,1:30:48.46,1:30:52.44,Default,,0000,0000,0000,,and it's a very repetitive process \Nand it's the same in this case
Dialogue: 0,1:30:52.44,1:30:57.79,Default,,0000,0000,0000,,so we will not go again through that part\Nwe will assume that we already did that,
Dialogue: 0,1:30:57.79,1:31:02.89,Default,,0000,0000,0000,,Ok, we post all of these \Nto the ledger accounts,
Dialogue: 0,1:31:02.89,1:31:06.23,Default,,0000,0000,0000,,so the ledger accounts are updated.
Dialogue: 0,1:31:06.23,1:31:12.18,Default,,0000,0000,0000,,But I will show you how to prepare \Nthe adjusted trial balance,
Dialogue: 0,1:31:12.18,1:31:14.87,Default,,0000,0000,0000,,using the worksheet, ok?
Dialogue: 0,1:31:14.87,1:31:18.02,Default,,0000,0000,0000,,Using a worksheet, it has the advantage\Nthat you can see
Dialogue: 0,1:31:18.02,1:31:22.93,Default,,0000,0000,0000,,what is the unadjusted trial balance, \Nyou can see the adjustments
Dialogue: 0,1:31:22.93,1:31:25.70,Default,,0000,0000,0000,,and how to prepare the \Nadjusted trial balance,
Dialogue: 0,1:31:25.70,1:31:28.88,Default,,0000,0000,0000,,how you can explain the difference \Nbetween the adjusted
Dialogue: 0,1:31:28.88,1:31:32.64,Default,,0000,0000,0000,,and the unadjusted trial balance.
Dialogue: 0,1:31:34.04,1:31:37.42,Default,,0000,0000,0000,,So here you have this worksheet.
Dialogue: 0,1:31:37.42,1:31:44.69,Default,,0000,0000,0000,,In the worksheet what we do \Nis you copy here in this part, ok?
Dialogue: 0,1:31:45.23,1:31:49.96,Default,,0000,0000,0000,,You copy the unadjusted trial balance.
Dialogue: 0,1:31:50.63,1:31:54.73,Default,,0000,0000,0000,,Of course, total debit should \Nbe equal to total credit.
Dialogue: 0,1:31:55.51,1:32:02.88,Default,,0000,0000,0000,,You just copy that and then you go \Nthrough all the adjusting entries
Dialogue: 0,1:32:02.88,1:32:11.66,Default,,0000,0000,0000,,and you put in the adjustment column,\Nthis, I will do just the first two, ok?
Dialogue: 0,1:32:12.20,1:32:14.10,Default,,0000,0000,0000,,Only the first two.
Dialogue: 0,1:32:14.41,1:32:17.48,Default,,0000,0000,0000,,So in the first one, \Nwhat do we have here?
Dialogue: 0,1:32:17.48,1:32:22.23,Default,,0000,0000,0000,,We debit 6400 in the supplies \Nexpense account
Dialogue: 0,1:32:22.23,1:32:27.39,Default,,0000,0000,0000,,and we credit 6400 \Nin the supplies account,
Dialogue: 0,1:32:27.39,1:32:31.73,Default,,0000,0000,0000,,so we look at this supplies \Nexpense account.
Dialogue: 0,1:32:31.73,1:32:38.27,Default,,0000,0000,0000,,This is the supplies expense account,\Nwe debit 6400, so we just copy there
Dialogue: 0,1:32:38.27,1:32:43.07,Default,,0000,0000,0000,,And the we go to the supplies account\Nthis is the supplies account,
Dialogue: 0,1:32:43.07,1:32:48.00,Default,,0000,0000,0000,,you debit this account, ok?
Dialogue: 0,1:32:48.00,1:32:50.60,Default,,0000,0000,0000,,You just copy here in these two columns
Dialogue: 0,1:32:50.60,1:32:54.67,Default,,0000,0000,0000,,what you have done \Nin the adjusting entries.
Dialogue: 0,1:32:54.67,1:33:01.31,Default,,0000,0000,0000,,The second, we will do just the first two.\NThe second, what do we have?
Dialogue: 0,1:33:01.31,1:33:05.48,Default,,0000,0000,0000,,1200 debit in electricity expense account
Dialogue: 0,1:33:05.48,1:33:09.90,Default,,0000,0000,0000,,1200 credit electricity payable account.
Dialogue: 0,1:33:09.90,1:33:15.52,Default,,0000,0000,0000,,So you copy that electricity \Nexpense account,
Dialogue: 0,1:33:15.52,1:33:22.00,Default,,0000,0000,0000,,1200 debit, you copy there\Nand then you look for electricity payable.
Dialogue: 0,1:33:22.00,1:33:29.57,Default,,0000,0000,0000,,Electricity payable credit 1200,\Nand you continue with all of this.
Dialogue: 0,1:33:29.57,1:33:33.30,Default,,0000,0000,0000,,The only thing that you need to be careful\Nis that sometimes,
Dialogue: 0,1:33:33.30,1:33:37.63,Default,,0000,0000,0000,,one account appears more than one time \Nin the adjusting entries.
Dialogue: 0,1:33:38.03,1:33:43.16,Default,,0000,0000,0000,,So if you look at the adjusting entries,\Nthere is one account
Dialogue: 0,1:33:43.16,1:33:47.02,Default,,0000,0000,0000,,that appears two times, \Nso service revenue.
Dialogue: 0,1:33:47.02,1:33:52.68,Default,,0000,0000,0000,,You have here service revenue, \Ncredit 3000,
Dialogue: 0,1:33:52.68,1:33:58.26,Default,,0000,0000,0000,,and then you have here service revenue,\N8000.
Dialogue: 0,1:33:58.26,1:34:03.96,Default,,0000,0000,0000,,So the total amount that we will add \Nto service revenue is 11000.
Dialogue: 0,1:34:03.96,1:34:10.52,Default,,0000,0000,0000,,That's why here service revenue \Nin the credit is 11000,
Dialogue: 0,1:34:10.52,1:34:14.14,Default,,0000,0000,0000,,so its the sum of 3000+8000.
Dialogue: 0,1:34:14.14,1:34:18.50,Default,,0000,0000,0000,,That you need to be careful because \Nwe need to add the total amounts,
Dialogue: 0,1:34:18.50,1:34:23.51,Default,,0000,0000,0000,,that increase the credit \Nof this account.
Dialogue: 0,1:34:23.51,1:34:26.99,Default,,0000,0000,0000,,Ok, so we complete these, \Nthe adjustments.
Dialogue: 0,1:34:26.99,1:34:30.59,Default,,0000,0000,0000,,We just copy all the adjusting entries, \Ndebit or credit
Dialogue: 0,1:34:30.59,1:34:34.35,Default,,0000,0000,0000,,in the corresponding accounts.
Dialogue: 0,1:34:36.32,1:34:39.88,Default,,0000,0000,0000,,Well, it's a really (INAUDIBLE)
Dialogue: 0,1:34:40.16,1:34:44.48,Default,,0000,0000,0000,,because very few accounts\Nyou will have more than one entry.
Dialogue: 0,1:34:44.48,1:34:50.26,Default,,0000,0000,0000,,In this case we have only service revenue\Nbut you know the to not make a mistake
Dialogue: 0,1:34:50.26,1:34:56.51,Default,,0000,0000,0000,,and I did that in the next exercise,\Nis this things.
Dialogue: 0,1:34:56.51,1:35:00.89,Default,,0000,0000,0000,,Do not make a mistake, I will give you \Na clue to not make a mistake.
Dialogue: 0,1:35:00.89,1:35:03.43,Default,,0000,0000,0000,,Instead I've put here the total.
Dialogue: 0,1:35:03.43,1:35:07.33,Default,,0000,0000,0000,,Every time you have an amount there\Njust put how much,
Dialogue: 0,1:35:07.33,1:35:11.82,Default,,0000,0000,0000,,so you put here the 3000,\NI will put in thousands
Dialogue: 0,1:35:11.82,1:35:19.13,Default,,0000,0000,0000,,and then you simply add 8,\Nso every time you put the number there.
Dialogue: 0,1:35:19.13,1:35:21.79,Default,,0000,0000,0000,,Then you know that it's 11000.
Dialogue: 0,1:35:21.79,1:35:25.83,Default,,0000,0000,0000,,In this way you will not skip anything.
Dialogue: 0,1:35:26.06,1:35:32.73,Default,,0000,0000,0000,,Ok, that is just a way to do\Nto not make that mistake.
Dialogue: 0,1:35:35.94,1:35:39.38,Default,,0000,0000,0000,,How we prepare now the \Nadjusted trial balance.
Dialogue: 0,1:35:40.88,1:35:45.65,Default,,0000,0000,0000,,The adjusted trial balance is the same \Nas the unadjusted trial balance
Dialogue: 0,1:35:45.65,1:35:47.60,Default,,0000,0000,0000,,with all the adjustments.
Dialogue: 0,1:35:47.60,1:35:52.62,Default,,0000,0000,0000,,So you can see for the cash accounts, \Nthere are no adjustments.
Dialogue: 0,1:35:52.62,1:35:58.12,Default,,0000,0000,0000,,Ok, no adjustments, so the adjusted\Ntrial balance is the same
Dialogue: 0,1:35:58.12,1:36:00.83,Default,,0000,0000,0000,,as the unadjusted trial balance.
Dialogue: 0,1:36:01.85,1:36:06.52,Default,,0000,0000,0000,,Accounts receivable, the unadjusted \Nis 23 and 40.
Dialogue: 0,1:36:06.52,1:36:12.75,Default,,0000,0000,0000,,The ajustment is debit 8000\Nso it directly increases the debit
Dialogue: 0,1:36:12.75,1:36:19.03,Default,,0000,0000,0000,,so the adjusted will be the sum\Nof all of them.
Dialogue: 0,1:36:20.25,1:36:25.04,Default,,0000,0000,0000,,Prepaid insurance we have a debit,\N9600.
Dialogue: 0,1:36:25.04,1:36:31.44,Default,,0000,0000,0000,,The adjustment is a credit of 1600,\Na credit decreases a debit,
Dialogue: 0,1:36:31.44,1:36:34.48,Default,,0000,0000,0000,,it's the opposite, ok?\NSo it will be the difference
Dialogue: 0,1:36:34.48,1:36:37.81,Default,,0000,0000,0000,,and there we adjusted this 8000.
Dialogue: 0,1:36:38.67,1:36:42.39,Default,,0000,0000,0000,,The same for supplies, \Nwe have 13600,
Dialogue: 0,1:36:42.39,1:36:47.56,Default,,0000,0000,0000,,the adjustment is a credit,\Ntherefore the credit decreases debit,
Dialogue: 0,1:36:47.56,1:36:54.20,Default,,0000,0000,0000,,that will be 7200, ok?
Dialogue: 0,1:36:54.92,1:36:56.13,Default,,0000,0000,0000,,And so on.
Dialogue: 0,1:36:56.13,1:36:59.74,Default,,0000,0000,0000,,Office equipment there is no adjustment\Naccumulated depreciation
Dialogue: 0,1:36:59.74,1:37:01.88,Default,,0000,0000,0000,,of office equipment, \Nthere is nothing here,
Dialogue: 0,1:37:01.88,1:37:06.69,Default,,0000,0000,0000,,because this is an account that was \Nin zero but we have an adjustment
Dialogue: 0,1:37:06.69,1:37:13.23,Default,,0000,0000,0000,,2880, so the adjusted trial balance \Nwill be a credit 2880.
Dialogue: 0,1:37:16.02,1:37:19.68,Default,,0000,0000,0000,,So you can see to prepare the adjusted \Ntrial balance is simple.
Dialogue: 0,1:37:19.68,1:37:26.46,Default,,0000,0000,0000,,If we're working with the worksheet,\Nwe just add or subtract the adjustment
Dialogue: 0,1:37:26.46,1:37:30.46,Default,,0000,0000,0000,,depending on whether they are \Non the same side or the opposite side.
Dialogue: 0,1:37:30.46,1:37:33.45,Default,,0000,0000,0000,,If they are on the same side, \Na debit increases a debit,
Dialogue: 0,1:37:33.45,1:37:38.11,Default,,0000,0000,0000,,a credit increases a credit, \Nbut in the opposite side
Dialogue: 0,1:37:38.11,1:37:44.47,Default,,0000,0000,0000,,a credit will decrease a debit\Nor a debit will decrease a credit.
Dialogue: 0,1:37:47.08,1:37:50.11,Default,,0000,0000,0000,,Any question?
Dialogue: 0,1:37:53.20,1:37:58.83,Default,,0000,0000,0000,,So once you have this worksheet...\NExcellent Joshua,
Dialogue: 0,1:37:59.62,1:38:03.05,Default,,0000,0000,0000,,Once you have the worksheet, \Nthe adjusted trial balance
Dialogue: 0,1:38:03.05,1:38:06.67,Default,,0000,0000,0000,,you can just copy.\NYou have the list of...
Dialogue: 0,1:38:08.52,1:38:13.12,Default,,0000,0000,0000,,You have the list of all this, ok?\NThe list of the accounts,
Dialogue: 0,1:38:13.12,1:38:18.20,Default,,0000,0000,0000,,you have the balance, \Nthe debit balance or the credit balance
Dialogue: 0,1:38:18.20,1:38:22.57,Default,,0000,0000,0000,,of all of these accounts,\Nand you can just copy them
Dialogue: 0,1:38:22.57,1:38:29.46,Default,,0000,0000,0000,,to have the adjusted trial balance\Nso if this is the adjusted trial balance
Dialogue: 0,1:38:29.46,1:38:33.36,Default,,0000,0000,0000,,the list of the accounts, \Nwhat accounts have a debit balance
Dialogue: 0,1:38:33.82,1:38:39.63,Default,,0000,0000,0000,,after the adjustments, \Nor credit balance, all of these accounts.
Dialogue: 0,1:38:45.47,1:38:51.49,Default,,0000,0000,0000,,That's the complete exercise and \Nthe adjusted trial balance.
Dialogue: 0,1:38:53.04,1:38:55.20,Default,,0000,0000,0000,,Any question?
Dialogue: 0,1:38:58.06,1:39:01.86,Default,,0000,0000,0000,,I think maybe we will use again \Nthe four hours
Dialogue: 0,1:39:01.86,1:39:04.70,Default,,0000,0000,0000,,because we still do not finish \Nthe lecture,
Dialogue: 0,1:39:04.70,1:39:06.72,Default,,0000,0000,0000,,we have the second exercise \Nof the lecture
Dialogue: 0,1:39:06.72,1:39:09.50,Default,,0000,0000,0000,,and then we have the exercise \Nof the workshop
Dialogue: 0,1:39:09.50,1:39:13.70,Default,,0000,0000,0000,,so definitely we are using \Nthe consultation time of the
Dialogue: 0,1:39:13.70,1:39:18.59,Default,,0000,0000,0000,,four hours to complete,\Nbut at this point,
Dialogue: 0,1:39:18.59,1:39:22.98,Default,,0000,0000,0000,,we are already one hour 40 minutes.
Dialogue: 0,1:39:22.98,1:39:28.29,Default,,0000,0000,0000,,It's good for you to have a break\Nso you can just prepare your coffee.
Dialogue: 0,1:39:32.16,1:39:35.33,Default,,0000,0000,0000,,No Natalia, I will answer that.\NYou prepare your coffee,
Dialogue: 0,1:39:35.38,1:39:41.80,Default,,0000,0000,0000,,you're soft drink, take a rest,\Nand we will meet in 10 minutes.
Dialogue: 0,1:39:43.36,1:39:48.47,Default,,0000,0000,0000,,Before I go I will just answer \Nthe question to Natalia.
Dialogue: 0,1:39:48.47,1:39:52.58,Default,,0000,0000,0000,,Still accountants do this step manually?\NNo, Natalia, no.
Dialogue: 0,1:39:52.91,1:39:57.03,Default,,0000,0000,0000,,I will talk about this when we come back \Nafter 10 minutes
Dialogue: 0,1:39:57.03,1:40:01.74,Default,,0000,0000,0000,,because I will talk about the assignment.\NThat will answer your question.
Dialogue: 0,1:40:02.32,1:40:05.43,Default,,0000,0000,0000,,And Tablynn, can you explain profit thing?
Dialogue: 0,1:40:05.43,1:40:10.13,Default,,0000,0000,0000,,Yes I will do that in the next exercise,\Nneed more exercise,
Dialogue: 0,1:40:10.13,1:40:13.23,Default,,0000,0000,0000,,we will do four Abdul, today.
Dialogue: 0,1:40:13.23,1:40:17.93,Default,,0000,0000,0000,,If we aren't late, pm, \Nno problem for me,
Dialogue: 0,1:40:17.93,1:40:23.76,Default,,0000,0000,0000,,but if you have the strength \Nto still be there,
Dialogue: 0,1:40:23.76,1:40:25.53,Default,,0000,0000,0000,,we'll be good...
Dialogue: 0,1:40:25.86,1:40:29.82,Default,,0000,0000,0000,,We will...\NWe will do many exercises today,
Dialogue: 0,1:40:29.82,1:40:36.64,Default,,0000,0000,0000,,but for now take a rest, relax.\NI need to grab my coffee as well,
Dialogue: 0,1:40:36.92,1:40:44.43,Default,,0000,0000,0000,,and 10 minutes, so it's 2.40. \NAt 2.50 we continue.
Dialogue: 0,1:40:44.63,1:40:51.70,Default,,0000,0000,0000,,I will disconnect the microphone,\N2.50 we continue, ok?
Dialogue: 0,1:51:17.21,1:51:21.53,Default,,0000,0000,0000,,Ok, here we are again, more relaxed
Dialogue: 0,1:51:21.53,1:51:26.36,Default,,0000,0000,0000,,and ready for another one\Nand a half hours.
Dialogue: 0,1:51:35.26,1:51:39.43,Default,,0000,0000,0000,,Before starting with the next exercise
Dialogue: 0,1:51:39.43,1:51:46.36,Default,,0000,0000,0000,,I will just give you some information
Dialogue: 0,1:51:46.74,1:51:48.85,Default,,0000,0000,0000,,about your first assignment.
Dialogue: 0,1:51:50.62,1:51:56.53,Default,,0000,0000,0000,,The assignment that you will have\Nis a very practical assignment
Dialogue: 0,1:51:57.36,1:52:05.55,Default,,0000,0000,0000,,and this will address one of the questions\Nabout Natalia,
Dialogue: 0,1:52:06.44,1:52:10.95,Default,,0000,0000,0000,,Natalia asked, still accountant do \Nthese steps manually?
Dialogue: 0,1:52:11.12,1:52:17.02,Default,,0000,0000,0000,,Well, accountants do not do this manually\Nbut of course the need to understand
Dialogue: 0,1:52:17.02,1:52:20.97,Default,,0000,0000,0000,,what the system does because if not,\Nthe possibility of errors
Dialogue: 0,1:52:20.97,1:52:22.20,Default,,0000,0000,0000,,could be very big.
Dialogue: 0,1:52:22.20,1:52:26.16,Default,,0000,0000,0000,,When you enter a journal entry \Nyou need to understand
Dialogue: 0,1:52:26.16,1:52:31.35,Default,,0000,0000,0000,,what continues after that, \Neven the system is doing that
Dialogue: 0,1:52:31.35,1:52:35.36,Default,,0000,0000,0000,,but you need to know how your ledger\Nis updated,
Dialogue: 0,1:52:35.36,1:52:38.78,Default,,0000,0000,0000,,how the trial balance is prepared,\Nit's very important to do that.
Dialogue: 0,1:52:38.78,1:52:44.09,Default,,0000,0000,0000,,That's why you learn to do this manually\Neven though then
Dialogue: 0,1:52:44.09,1:52:46.59,Default,,0000,0000,0000,,the system will do this for you.
Dialogue: 0,1:52:46.59,1:52:52.17,Default,,0000,0000,0000,,OK, but you need to be able to check\Nwhether the system is doing well or not.
Dialogue: 0,1:52:52.67,1:52:55.98,Default,,0000,0000,0000,,In this course you will have \Nthe opportunity to deal with
Dialogue: 0,1:52:55.98,1:53:01.93,Default,,0000,0000,0000,,one of the most commonly used \NAccounting software,
Dialogue: 0,1:53:01.93,1:53:08.80,Default,,0000,0000,0000,,it's a cloud accounting because \Neverything is in the cloud
Dialogue: 0,1:53:08.80,1:53:12.26,Default,,0000,0000,0000,,and not in the computer of \Nthe organization,
Dialogue: 0,1:53:12.26,1:53:14.44,Default,,0000,0000,0000,,and that is Xero.
Dialogue: 0,1:53:14.44,1:53:21.24,Default,,0000,0000,0000,,Xero is used by many small \Nand medium companies.
Dialogue: 0,1:53:21.24,1:53:25.15,Default,,0000,0000,0000,,Not the very big ones because they \Nhave their own systems,
Dialogue: 0,1:53:25.15,1:53:30.66,Default,,0000,0000,0000,,but many small and medium companies\Nuse Xero.
Dialogue: 0,1:53:30.66,1:53:37.61,Default,,0000,0000,0000,,Accounting Pod is an organization\Nthat facilitates
Dialogue: 0,1:53:37.61,1:53:42.90,Default,,0000,0000,0000,,the learning of this software.
Dialogue: 0,1:53:42.90,1:53:49.48,Default,,0000,0000,0000,,Griffith University has an arrangement\Nwith Accounting Pod
Dialogue: 0,1:53:49.48,1:53:55.36,Default,,0000,0000,0000,,to provide this facilitation, \Nfor learning Xero,
Dialogue: 0,1:53:55.36,1:54:00.62,Default,,0000,0000,0000,,and we have set up the assignment \Nthat you will have in this,
Dialogue: 0,1:54:00.62,1:54:03.74,Default,,0000,0000,0000,,using this software.
Dialogue: 0,1:54:03.74,1:54:11.67,Default,,0000,0000,0000,,So next Monday, 3rd August,\Nthe module,
Dialogue: 0,1:54:11.67,1:54:18.81,Default,,0000,0000,0000,,the practice module of Accounting Pod\Nwill be open for you.
Dialogue: 0,1:54:18.81,1:54:24.10,Default,,0000,0000,0000,,And it will be open practically \Nthe whole month of August,
Dialogue: 0,1:54:24.10,1:54:28.72,Default,,0000,0000,0000,,until the 27th of August,\Nthat will be closed at 5.00 pm.
Dialogue: 0,1:54:28.72,1:54:36.66,Default,,0000,0000,0000,,So what is the idea is that you do this.\NYou follow step by step
Dialogue: 0,1:54:36.66,1:54:41.74,Default,,0000,0000,0000,,all the processes and you will learn\Nhow to use this software,
Dialogue: 0,1:54:41.96,1:54:46.22,Default,,0000,0000,0000,,so you will do what accountants do\Nin the practice, ok?
Dialogue: 0,1:54:46.42,1:54:52.74,Default,,0000,0000,0000,,And this assessment, the assignment\Nwe have two parts,
Dialogue: 0,1:54:52.74,1:54:57.55,Default,,0000,0000,0000,,we have the practice module \Nthat it's called,
Dialogue: 0,1:54:57.55,1:55:01.75,Default,,0000,0000,0000,,that will be open next Monday,
Dialogue: 0,1:55:01.75,1:55:07.80,Default,,0000,0000,0000,,and then after it is closed,\Nthat means the 27th of August.
Dialogue: 0,1:55:07.80,1:55:13.79,Default,,0000,0000,0000,,On the 1st of September we will open \Nthe second part of this assessment
Dialogue: 0,1:55:13.79,1:55:17.08,Default,,0000,0000,0000,,which is the Xero assessment.
Dialogue: 0,1:55:17.08,1:55:19.55,Default,,0000,0000,0000,,That will be opened on the \N1st of September,
Dialogue: 0,1:55:19.55,1:55:24.32,Default,,0000,0000,0000,,and it will be closed on the 23rd \Nof September, 5.00 pm,
Dialogue: 0,1:55:24.32,1:55:28.15,Default,,0000,0000,0000,,so at that point you need to finish \Nthe second part.
Dialogue: 0,1:55:28.41,1:55:34.49,Default,,0000,0000,0000,,Your marks will be based on what you do \Nin this task.
Dialogue: 0,1:55:34.78,1:55:37.30,Default,,0000,0000,0000,,The marks are allocated...
Dialogue: 0,1:55:40.63,1:55:45.10,Default,,0000,0000,0000,,The marks are allocated to the task\Nthat you are doing.
Dialogue: 0,1:55:45.27,1:55:50.56,Default,,0000,0000,0000,,Now, in the question by Jade,\Nwhat learning modules
Dialogue: 0,1:55:50.56,1:55:53.16,Default,,0000,0000,0000,,will the practice on Xero cover?
Dialogue: 0,1:55:53.16,1:56:00.62,Default,,0000,0000,0000,,What you need to know is just the basics\Nof the accounting cycle,
Dialogue: 0,1:56:00.62,1:56:07.04,Default,,0000,0000,0000,,so to understand what is a journal entry,\Nwhat are the ledger accounts.
Dialogue: 0,1:56:07.22,1:56:12.53,Default,,0000,0000,0000,,But the training that you will do,\Nyou will see it's very...
Dialogue: 0,1:56:12.53,1:56:18.87,Default,,0000,0000,0000,,Totally different to what we are doing\Nin the accounting period,
Dialogue: 0,1:56:18.98,1:56:25.79,Default,,0000,0000,0000,,because you will do tasks related \Nto a software.
Dialogue: 0,1:56:25.79,1:56:30.39,Default,,0000,0000,0000,,I will explain in a bit of detail \Nbut next week, on Tuesday of next week,
Dialogue: 0,1:56:30.50,1:56:34.46,Default,,0000,0000,0000,,I will dedicate more time to explain \Nto you in more detail
Dialogue: 0,1:56:34.46,1:56:39.79,Default,,0000,0000,0000,,what you have to do because at that point\Nyou will have this already open, ok?
Dialogue: 0,1:56:40.08,1:56:46.83,Default,,0000,0000,0000,,Now it's not there, \Nyou cannot see this software yet.
Dialogue: 0,1:56:48.98,1:56:54.00,Default,,0000,0000,0000,,There are three modules in each \Nassessment task,
Dialogue: 0,1:56:54.22,1:56:57.01,Default,,0000,0000,0000,,the practice and the assessment.
Dialogue: 0,1:56:57.01,1:57:01.17,Default,,0000,0000,0000,,Your marks for the assignment\Nwill be the average of all these,
Dialogue: 0,1:57:01.66,1:57:04.59,Default,,0000,0000,0000,,ok, the practice and the assessment.
Dialogue: 0,1:57:04.59,1:57:08.83,Default,,0000,0000,0000,,You will have a rubric for this\Nso you will know exactly how
Dialogue: 0,1:57:08.83,1:57:11.45,Default,,0000,0000,0000,,your marks will be allocated.
Dialogue: 0,1:57:11.45,1:57:15.46,Default,,0000,0000,0000,,The system marks you, so it's not that\NI will mark this.
Dialogue: 0,1:57:15.46,1:57:22.25,Default,,0000,0000,0000,,For each task completed, \Nthe system will mark you,
Dialogue: 0,1:57:22.25,1:57:25.41,Default,,0000,0000,0000,,and you will have the marks \Naccording to the task.
Dialogue: 0,1:57:25.41,1:57:28.72,Default,,0000,0000,0000,,I will give you some guidelines \Nnext week on that.
Dialogue: 0,1:57:28.72,1:57:38.44,Default,,0000,0000,0000,,But in the first part, the practice set, \Nthere are three modules, actually four,
Dialogue: 0,1:57:39.07,1:57:44.41,Default,,0000,0000,0000,,but the important models \Nare modules two and three.
Dialogue: 0,1:57:44.41,1:57:50.76,Default,,0000,0000,0000,,The module one is just a welcome for you\Nto have a welcome to the system,
Dialogue: 0,1:57:50.76,1:57:53.84,Default,,0000,0000,0000,,there are no marks allocated there.
Dialogue: 0,1:57:53.84,1:57:59.02,Default,,0000,0000,0000,,Module two is the basics, \Nand there are 20 marks allocated there.
Dialogue: 0,1:57:59.02,1:58:07.09,Default,,0000,0000,0000,,There are very simple tasks that will \Ntell you how to work in Xero.
Dialogue: 0,1:58:07.09,1:58:13.66,Default,,0000,0000,0000,,One of the tasks is for example to set up\Nan authentication in door,
Dialogue: 0,1:58:14.21,1:58:22.56,Default,,0000,0000,0000,,so it's not related to accounting at all,\Nbut is related to working with this...
Dialogue: 0,1:58:23.01,1:58:25.68,Default,,0000,0000,0000,,with the system.
Dialogue: 0,1:58:25.68,1:58:31.35,Default,,0000,0000,0000,,My suggestion would be to always \Nlook at the question that you have
Dialogue: 0,1:58:31.35,1:58:36.77,Default,,0000,0000,0000,,for each task and the possible answer,\Nand then look at the content.
Dialogue: 0,1:58:37.86,1:58:44.55,Default,,0000,0000,0000,,Try to not answer the question immediately\Nbut go through the content.
Dialogue: 0,1:58:44.55,1:58:49.50,Default,,0000,0000,0000,,You will learn through the content, \Nnot just answering the questions.
Dialogue: 0,1:58:49.50,1:58:54.52,Default,,0000,0000,0000,,Try not to do what is...\NYou look at the question, possible answer,
Dialogue: 0,1:58:54.52,1:58:57.51,Default,,0000,0000,0000,,and then you try to find the answer\Nin the content,
Dialogue: 0,1:58:57.51,1:58:59.94,Default,,0000,0000,0000,,because you will not learn a lot.
Dialogue: 0,1:58:59.94,1:59:05.73,Default,,0000,0000,0000,,The idea is that you learn how \Nto use Xero, this system, ok?
Dialogue: 0,1:59:05.92,1:59:09.20,Default,,0000,0000,0000,,And to learn that it's good that you \Ngo through the content
Dialogue: 0,1:59:09.20,1:59:12.80,Default,,0000,0000,0000,,trying to learn what is this about?
Dialogue: 0,1:59:12.80,1:59:16.73,Default,,0000,0000,0000,,And the next module, \Nthe module three that is Xero,
Dialogue: 0,1:59:16.73,1:59:19.68,Default,,0000,0000,0000,,in that module you will work in Xero.
Dialogue: 0,1:59:19.68,1:59:26.41,Default,,0000,0000,0000,,So module two is just to prepare,\Nyou will be prepared to work with Xero
Dialogue: 0,1:59:26.79,1:59:31.72,Default,,0000,0000,0000,,but it's not yet the working withing Xero.
Dialogue: 0,1:59:31.72,1:59:35.52,Default,,0000,0000,0000,,Module three yes, \Nyou will have a number of tasks
Dialogue: 0,1:59:35.52,1:59:40.98,Default,,0000,0000,0000,,following the instructions that \NAccounting Pod will give you
Dialogue: 0,1:59:40.98,1:59:45.01,Default,,0000,0000,0000,,to complete this task \Nand provide the answers.
Dialogue: 0,1:59:46.70,1:59:51.04,Default,,0000,0000,0000,,So then the module four is just to wrap up\Na couple of questions,
Dialogue: 0,1:59:51.04,1:59:53.41,Default,,0000,0000,0000,,but not really important.
Dialogue: 0,1:59:53.41,1:59:56.51,Default,,0000,0000,0000,,Module two and three are \Nthe most important.
Dialogue: 0,1:59:56.51,2:00:00.63,Default,,0000,0000,0000,,Now when you finish one module, \Nthen you will have access to the next one
Dialogue: 0,2:00:00.63,2:00:04.14,Default,,0000,0000,0000,,and so on, \Nso you need to go step by step.
Dialogue: 0,2:00:04.14,2:00:11.100,Default,,0000,0000,0000,,In this sense, this is,\Neven though you need some knowledge
Dialogue: 0,2:00:11.100,2:00:15.87,Default,,0000,0000,0000,,in accounting that you already have,\Nyou don't need more than that
Dialogue: 0,2:00:15.87,2:00:21.71,Default,,0000,0000,0000,,because it's different to learn how to \Nwork with a software in accounting
Dialogue: 0,2:00:21.71,2:00:27.10,Default,,0000,0000,0000,,than how to do accounting, \Nthat is what you are doing now.
Dialogue: 0,2:00:27.51,2:00:32.05,Default,,0000,0000,0000,,Then the assessment part is just the \Napplication of all what you have learned
Dialogue: 0,2:00:32.05,2:00:36.96,Default,,0000,0000,0000,,in the practice part, \Nand in a different case scenario.
Dialogue: 0,2:00:37.61,2:00:42.50,Default,,0000,0000,0000,,So that is in general what you will \Nfrom next week,
Dialogue: 0,2:00:42.50,2:00:46.24,Default,,0000,0000,0000,,there is time, \Ndon't wait till the last two days.
Dialogue: 0,2:00:46.24,2:00:51.67,Default,,0000,0000,0000,,For example, it opens 2nd August, \Nit will be closed 27th of August,
Dialogue: 0,2:00:51.67,2:00:56.28,Default,,0000,0000,0000,,do not wait until the 25th of August\Nfor all the task,
Dialogue: 0,2:00:56.28,2:01:00.04,Default,,0000,0000,0000,,because you need time for that.
Dialogue: 0,2:01:00.36,2:01:02.74,Default,,0000,0000,0000,,You need time to reflect on what \Nyou're learning,
Dialogue: 0,2:01:02.74,2:01:08.52,Default,,0000,0000,0000,,you need time to properly do the task\Nand go just a little bit
Dialogue: 0,2:01:09.07,2:01:13.06,Default,,0000,0000,0000,,during the time this will be open.
Dialogue: 0,2:01:13.72,2:01:18.57,Default,,0000,0000,0000,,It will not take a long time, ok?\Nit will not take a very long time,
Dialogue: 0,2:01:18.57,2:01:22.90,Default,,0000,0000,0000,,probably you can do this in three\Nor four days, if you dedicate full time,
Dialogue: 0,2:01:22.90,2:01:27.21,Default,,0000,0000,0000,,but that is not the best way to learn.
Dialogue: 0,2:01:28.29,2:01:32.50,Default,,0000,0000,0000,,Yes, you will have marks Cecilia\Nin the practice part
Dialogue: 0,2:01:32.50,2:01:38.56,Default,,0000,0000,0000,,and actually the total marks \Nthat you will have is the average
Dialogue: 0,2:01:40.01,2:01:44.71,Default,,0000,0000,0000,,weighted average of the practice part \Nand the assessment part.
Dialogue: 0,2:01:44.100,2:01:48.16,Default,,0000,0000,0000,,I also considered to give marks\Nfor the practice part
Dialogue: 0,2:01:48.16,2:01:51.91,Default,,0000,0000,0000,,because in the practice part,\Nit will be easier for you,
Dialogue: 0,2:01:51.91,2:01:56.25,Default,,0000,0000,0000,,but the intention is that you learn\Nhow to use the software
Dialogue: 0,2:01:56.25,2:01:59.91,Default,,0000,0000,0000,,and how to use this software \Nis in the practice part.
Dialogue: 0,2:02:00.17,2:02:03.43,Default,,0000,0000,0000,,In the assessment part \Nyou will apply all of this,
Dialogue: 0,2:02:03.43,2:02:07.20,Default,,0000,0000,0000,,so there are marks allocated \Nin the practice part as well, yeah.
Dialogue: 0,2:02:09.29,2:02:13.04,Default,,0000,0000,0000,,So this is just some information that \NI want to give you in advance
Dialogue: 0,2:02:13.19,2:02:21.23,Default,,0000,0000,0000,,and next week with this open,\NI will show you the screens
Dialogue: 0,2:02:21.54,2:02:25.95,Default,,0000,0000,0000,,and I can share screens \Nfor you to do this.
Dialogue: 0,2:02:27.29,2:02:32.37,Default,,0000,0000,0000,,Cecilia, is there any way we can practice \Nusing the system without getting marks?
Dialogue: 0,2:02:32.37,2:02:36.44,Default,,0000,0000,0000,,Yes, because you don't need to submit
Dialogue: 0,2:02:36.44,2:02:40.23,Default,,0000,0000,0000,,but now you will see \Nit's very straightforward,
Dialogue: 0,2:02:40.23,2:02:43.38,Default,,0000,0000,0000,,the system will tell you \Nexactly what to do,
Dialogue: 0,2:02:43.38,2:02:46.75,Default,,0000,0000,0000,,so if you do well, you don't need\Nto do it again,
Dialogue: 0,2:02:46.75,2:02:48.35,Default,,0000,0000,0000,,but try to do well.
Dialogue: 0,2:02:48.35,2:02:54.21,Default,,0000,0000,0000,,Now there is some not in the practice part\Nbut in the assessment part
Dialogue: 0,2:02:54.21,2:03:02.71,Default,,0000,0000,0000,,there is feedback that you can receive\Nand also you can ask questions.
Dialogue: 0,2:03:02.71,2:03:09.58,Default,,0000,0000,0000,,Now the specific question of the software\Nplease do not ask me that way
Dialogue: 0,2:03:09.58,2:03:13.28,Default,,0000,0000,0000,,but to the system, there is a box\Nthat you will see next week,
Dialogue: 0,2:03:13.28,2:03:16.28,Default,,0000,0000,0000,,that says 'leave us a message'.
Dialogue: 0,2:03:16.28,2:03:21.55,Default,,0000,0000,0000,,You leave all the questions there \Nand they will answer you immediately.
Dialogue: 0,2:03:21.55,2:03:24.22,Default,,0000,0000,0000,,If you have a problem with this,\Nof course you contact me
Dialogue: 0,2:03:24.22,2:03:32.54,Default,,0000,0000,0000,,and I will deal with them, but they \Nanswer quite quick all your questions.
Dialogue: 0,2:03:33.73,2:03:39.20,Default,,0000,0000,0000,,Ok, now I have another message,
Dialogue: 0,2:03:39.20,2:03:42.91,Default,,0000,0000,0000,,and this is another caption.
Dialogue: 0,2:03:43.80,2:03:48.72,Default,,0000,0000,0000,,Who sent me a message about captioning?\NThey'll need the captioning.
Dialogue: 0,2:03:51.55,2:03:59.77,Default,,0000,0000,0000,,Cassandra is that you?\NOk, I've added you.
Dialogue: 0,2:04:05.93,2:04:11.30,Default,,0000,0000,0000,,Ok, so now we can continue\Nwith the next exercise.
Dialogue: 0,2:04:15.66,2:04:21.16,Default,,0000,0000,0000,,And we are still in the lecture\Nso definitely will end a bit late
Dialogue: 0,2:04:23.60,2:04:29.79,Default,,0000,0000,0000,,but I prefer to clarify anything you need\Nit's important for you.
Dialogue: 0,2:04:36.17,2:04:37.70,Default,,0000,0000,0000,,Ok, so...
Dialogue: 0,2:04:42.50,2:04:50.44,Default,,0000,0000,0000,,I guess we don't need to put this...\NOk.
Dialogue: 0,2:04:52.11,2:04:58.63,Default,,0000,0000,0000,,Here you have the next question.\NThis is...
Dialogue: 0,2:04:59.31,2:05:01.81,Default,,0000,0000,0000,,I do not know if you can see well \Nin your screen
Dialogue: 0,2:05:01.81,2:05:05.15,Default,,0000,0000,0000,,because this uses the whole one\Nin my screen.
Dialogue: 0,2:05:05.15,2:05:07.80,Default,,0000,0000,0000,,Can you see we're on this table?
Dialogue: 0,2:05:10.100,2:05:14.58,Default,,0000,0000,0000,,Yes, ok, excellent.\NExcellent, thank you.
Dialogue: 0,2:05:17.01,2:05:26.10,Default,,0000,0000,0000,,So this exercise starts as well\Nfrom the unadjusted trial balance,
Dialogue: 0,2:05:26.37,2:05:28.42,Default,,0000,0000,0000,,the same as this one.
Dialogue: 0,2:05:28.42,2:05:34.43,Default,,0000,0000,0000,,And they open for business \Non 1st of April 2019
Dialogue: 0,2:05:34.43,2:05:40.63,Default,,0000,0000,0000,,and the trial balance is on 30th of June,\Nso how many months do we have?
Dialogue: 0,2:05:40.63,2:05:46.61,Default,,0000,0000,0000,,This is important because we will need \Nthis to calculate the adjusting entries,
Dialogue: 0,2:05:46.61,2:05:50.48,Default,,0000,0000,0000,,how many months since we started? \NThree months.
Dialogue: 0,2:05:50.48,2:05:55.02,Default,,0000,0000,0000,,So remember that from 1st of April\Nuntil the date,
Dialogue: 0,2:05:55.05,2:05:57.19,Default,,0000,0000,0000,,very good Natalia, three months,
Dialogue: 0,2:05:57.19,2:06:02.72,Default,,0000,0000,0000,,until the date of these financial \Nstatements, three months,
Dialogue: 0,2:06:02.72,2:06:04.62,Default,,0000,0000,0000,,that is what we will consider.
Dialogue: 0,2:06:04.62,2:06:08.03,Default,,0000,0000,0000,,So what we have here in this,\Nthis is the worksheet.
Dialogue: 0,2:06:08.03,2:06:11.49,Default,,0000,0000,0000,,You can see we add more columns.
Dialogue: 0,2:06:11.49,2:06:18.81,Default,,0000,0000,0000,,What we have at the beginning is the\Nunadjusted trial balance,
Dialogue: 0,2:06:18.81,2:06:22.80,Default,,0000,0000,0000,,that I am showing you there,\Nunadjusted trial balance.
Dialogue: 0,2:06:22.80,2:06:27.42,Default,,0000,0000,0000,,Then we put in the adjustments,\Nall the adjusting entries,
Dialogue: 0,2:06:27.42,2:06:32.75,Default,,0000,0000,0000,,we will do that in this exercise as well,\Nand from this we prepare what is called
Dialogue: 0,2:06:32.75,2:06:36.02,Default,,0000,0000,0000,,the adjusted trial balance.
Dialogue: 0,2:06:36.71,2:06:43.60,Default,,0000,0000,0000,,But now we will add the last part \Nfor today which is the closing entries
Dialogue: 0,2:06:43.60,2:06:48.11,Default,,0000,0000,0000,,so you can see we have now \Nthree types of entries.
Dialogue: 0,2:06:48.11,2:06:54.68,Default,,0000,0000,0000,,Just the general entries, or journal \Nentries that come from transactions
Dialogue: 0,2:06:54.68,2:06:56.75,Default,,0000,0000,0000,,that we did last week.
Dialogue: 0,2:06:56.75,2:07:02.22,Default,,0000,0000,0000,,We have the adjusting entries \Nthat we prepared in the first part,
Dialogue: 0,2:07:02.22,2:07:07.17,Default,,0000,0000,0000,,and we have the closing entries and we\Nwill see what are the closing entries.
Dialogue: 0,2:07:07.17,2:07:11.36,Default,,0000,0000,0000,,After the closing entries we prepare \Nanother trial balance
Dialogue: 0,2:07:11.36,2:07:14.81,Default,,0000,0000,0000,,which is the post-closing trial balance.
Dialogue: 0,2:07:14.81,2:07:20.13,Default,,0000,0000,0000,,And with this we complete, \Nalmost complete the accounting cycle.
Dialogue: 0,2:07:20.13,2:07:24.96,Default,,0000,0000,0000,,After this we only need to prepare \Nthe financial statements.
Dialogue: 0,2:07:25.82,2:07:32.08,Default,,0000,0000,0000,,So we have the list of accounts,\Nhere you have all the list of accounts
Dialogue: 0,2:07:32.08,2:07:38.41,Default,,0000,0000,0000,,that we will use in this and we have the\Nending balance of each of these accounts
Dialogue: 0,2:07:39.72,2:07:43.75,Default,,0000,0000,0000,,in the unadjusted trial balance,\Nthat means before adjustment,
Dialogue: 0,2:07:43.75,2:07:50.06,Default,,0000,0000,0000,,these are the balances \Nof all of these accounts, ok?
Dialogue: 0,2:07:53.97,2:07:59.36,Default,,0000,0000,0000,,Here we continue with different \Ntypes of accounts,
Dialogue: 0,2:07:59.36,2:08:01.90,Default,,0000,0000,0000,,we will go in detail with all of them.
Dialogue: 0,2:08:01.90,2:08:04.92,Default,,0000,0000,0000,,And of course, \Nthe unadjusted trial balance
Dialogue: 0,2:08:04.92,2:08:09.21,Default,,0000,0000,0000,,the total debits should be equal \Nto total credit.
Dialogue: 0,2:08:09.21,2:08:15.37,Default,,0000,0000,0000,,That's in all the trial balances, \Ntotal debit equals total credit.
Dialogue: 0,2:08:17.24,2:08:20.39,Default,,0000,0000,0000,,So here we have the additional data.
Dialogue: 0,2:08:20.39,2:08:24.01,Default,,0000,0000,0000,,The additional data as you already know\Nis the data that we need
Dialogue: 0,2:08:24.01,2:08:30.80,Default,,0000,0000,0000,,to prepare the adjusting entries,\Nso we will go through these six entries,
Dialogue: 0,2:08:30.80,2:08:38.45,Default,,0000,0000,0000,,six additional data to prepare \Nthe adjusting entries.
Dialogue: 0,2:08:38.73,2:08:43.43,Default,,0000,0000,0000,,We will journalize the adjusting entries\Nso we will record them,
Dialogue: 0,2:08:43.43,2:08:48.04,Default,,0000,0000,0000,,what is the debit, what is the credit\Nof each of this adjusting entries.
Dialogue: 0,2:08:48.04,2:08:50.84,Default,,0000,0000,0000,,And then with this adjusting entries,
Dialogue: 0,2:08:50.84,2:08:55.76,Default,,0000,0000,0000,,we will complete the adjusted trial \Nbalance in the worksheet.
Dialogue: 0,2:08:58.10,2:09:01.42,Default,,0000,0000,0000,,Then from the adjusted trial balance\Nin the worksheet,
Dialogue: 0,2:09:01.42,2:09:05.10,Default,,0000,0000,0000,,we will prepare the closing entries.
Dialogue: 0,2:09:05.81,2:09:08.40,Default,,0000,0000,0000,,And using the information \Nof the closing entries,
Dialogue: 0,2:09:08.40,2:09:12.75,Default,,0000,0000,0000,,we will prepare the post-closing entries\Ntrial balance.
Dialogue: 0,2:09:12.75,2:09:15.17,Default,,0000,0000,0000,,So this is a very complete exercise,
Dialogue: 0,2:09:15.17,2:09:17.77,Default,,0000,0000,0000,,the starting with the unadjusted \Ntrial balance
Dialogue: 0,2:09:17.77,2:09:23.28,Default,,0000,0000,0000,,until the post-closing entries\Ntrial balance.
Dialogue: 0,2:09:23.28,2:09:28.16,Default,,0000,0000,0000,,So we will start with \Nthe adjusting entries.
Dialogue: 0,2:09:28.16,2:09:34.51,Default,,0000,0000,0000,,The first one, insurance expires \Nat a rate of $900 per month
Dialogue: 0,2:09:34.51,2:09:41.24,Default,,0000,0000,0000,,and is an annual premium commencing\N1st April 2019.
Dialogue: 0,2:09:41.24,2:09:49.78,Default,,0000,0000,0000,,So what might this description\Nbe telling us?
Dialogue: 0,2:09:49.78,2:09:55.30,Default,,0000,0000,0000,,It says that three months, so it's already\Ncalculated the total policy divided by 12,
Dialogue: 0,2:09:55.30,2:10:00.03,Default,,0000,0000,0000,,it should be 900 per month,\Nthat is the insurance expense per month
Dialogue: 0,2:10:00.03,2:10:05.25,Default,,0000,0000,0000,,when this started on 1st of April,\Nat the beginning of this period
Dialogue: 0,2:10:05.25,2:10:08.63,Default,,0000,0000,0000,,and we have already three months\Nif you remember.
Dialogue: 0,2:10:08.63,2:10:15.31,Default,,0000,0000,0000,,So in three months by $900\Nis 2700.
Dialogue: 0,2:10:15.31,2:10:21.30,Default,,0000,0000,0000,,We need to record the debit,\Nthe insurance expense clearly,
Dialogue: 0,2:10:21.30,2:10:24.63,Default,,0000,0000,0000,,then prepaid insurance.
Dialogue: 0,2:10:24.63,2:10:33.45,Default,,0000,0000,0000,,So we look at our journal entries,\Ninsurance expense, and prepaid insurance.
Dialogue: 0,2:10:33.45,2:10:37.70,Default,,0000,0000,0000,,Here you have debit 2700 \Ninsurance expense,
Dialogue: 0,2:10:37.70,2:10:43.95,Default,,0000,0000,0000,,credit 2700 prepaid insurance,\Nand that is the first one, ok?
Dialogue: 0,2:10:47.27,2:10:52.24,Default,,0000,0000,0000,,I will go a bit quicker in this \Nbut please stop me at any time
Dialogue: 0,2:10:52.24,2:10:55.61,Default,,0000,0000,0000,,and ask me if there is something that\Nyou would like to clarify.
Dialogue: 0,2:10:55.61,2:10:59.84,Default,,0000,0000,0000,,Of course I will explain well but because\Nwe've gone through this already
Dialogue: 0,2:10:59.84,2:11:01.69,Default,,0000,0000,0000,,they are similar.
Dialogue: 0,2:11:01.69,2:11:09.35,Default,,0000,0000,0000,,If it is clear just..\NJust (INAUDIBLE).
Dialogue: 0,2:11:10.53,2:11:16.10,Default,,0000,0000,0000,,Ok, sorry.\NWhat was the question?
Dialogue: 0,2:11:17.69,2:11:22.56,Default,,0000,0000,0000,,Here is it prepaid insurance?\NYes it is prepaid insurance.
Dialogue: 0,2:11:22.98,2:11:29.86,Default,,0000,0000,0000,,Ok, ok. So to answer that question we\Nneed to look at from where comes this.
Dialogue: 0,2:11:30.19,2:11:35.77,Default,,0000,0000,0000,,Insurance expires at the rate of $900\Nper month.
Dialogue: 0,2:11:35.77,2:11:42.40,Default,,0000,0000,0000,,From where does this come?\NThis comes from a prepaid insurance
Dialogue: 0,2:11:42.40,2:11:47.24,Default,,0000,0000,0000,,so that means the company paid in advance\Nit's a prepayment,
Dialogue: 0,2:11:47.24,2:11:53.21,Default,,0000,0000,0000,,the insurance for the next 12 months\Non 1st April.
Dialogue: 0,2:11:53.21,2:12:00.45,Default,,0000,0000,0000,,1st April the company paid the whole year,\Nthat means 12 months insurance.
Dialogue: 0,2:12:00.45,2:12:01.74,Default,,0000,0000,0000,,What amount?
Dialogue: 0,2:12:01.74,2:12:08.38,Default,,0000,0000,0000,,To know that you need to look \Nat the account prepaid insurance,
Dialogue: 0,2:12:08.38,2:12:14.58,Default,,0000,0000,0000,,here you have, ok, \Nprepaid insurance debit 10800.
Dialogue: 0,2:12:14.58,2:12:18.50,Default,,0000,0000,0000,,If you divide this by 12 it's 900.
Dialogue: 0,2:12:18.50,2:12:22.73,Default,,0000,0000,0000,,That means every month you need \Nto record an insurance expense
Dialogue: 0,2:12:22.73,2:12:27.74,Default,,0000,0000,0000,,because you will consume this policy\Nin 12 months.
Dialogue: 0,2:12:27.74,2:12:33.90,Default,,0000,0000,0000,,So every month you need to record \Nan insurance expense of 900 every month
Dialogue: 0,2:12:33.90,2:12:46.62,Default,,0000,0000,0000,,and we have three months so it will be\Nthe total of 2700 as insurance expense
Dialogue: 0,2:12:46.62,2:12:55.34,Default,,0000,0000,0000,,and we decrease the prepaid insurance,\Nvery good, excellent.
Dialogue: 0,2:12:55.76,2:13:02.81,Default,,0000,0000,0000,,Ok, the second one, \Nan inventory of supplies shows 7200
Dialogue: 0,2:13:02.81,2:13:08.22,Default,,0000,0000,0000,,of unused supplies on 30th June.
Dialogue: 0,2:13:08.22,2:13:14.72,Default,,0000,0000,0000,,So we still have 7200 supplies \Nin the inventory.
Dialogue: 0,2:13:14.72,2:13:18.92,Default,,0000,0000,0000,,How much do we have in the \Nunadjusted trial balance?
Dialogue: 0,2:13:20.98,2:13:30.03,Default,,0000,0000,0000,,Supplies, 11400,\Nand we have 7200 at the end of June
Dialogue: 0,2:13:30.03,2:13:32.19,Default,,0000,0000,0000,,so we have use the difference.
Dialogue: 0,2:13:32.19,2:13:39.66,Default,,0000,0000,0000,,What is the difference between 11400\Nand 7200? It's 4200.
Dialogue: 0,2:13:39.66,2:13:47.66,Default,,0000,0000,0000,,So we have a supplies expense debit 4200\Nand we credit this account supplies
Dialogue: 0,2:13:47.66,2:13:51.87,Default,,0000,0000,0000,,to reduce 4200 from here.
Dialogue: 0,2:13:51.87,2:14:03.35,Default,,0000,0000,0000,,So the journal entry, the adjusting entry,\Nit will be supplies expense 4200 debit
Dialogue: 0,2:14:04.02,2:14:09.73,Default,,0000,0000,0000,,and we credit supplies 4200.\NWith this we decrease the supplies account
Dialogue: 0,2:14:09.73,2:14:16.12,Default,,0000,0000,0000,,and now we will have the balance\Nthat we calculate here.
Dialogue: 0,2:14:16.12,2:14:20.12,Default,,0000,0000,0000,,That we count, we count the items, \Nwe value the items
Dialogue: 0,2:14:20.12,2:14:24.13,Default,,0000,0000,0000,,and what we have \Nat the end of June is 7200, ok?
Dialogue: 0,2:14:24.13,2:14:32.88,Default,,0000,0000,0000,,So that is the second adjustment.\NThe third one.
Dialogue: 0,2:14:33.51,2:14:40.40,Default,,0000,0000,0000,,The depreciation for the year \Nended 30 is 5400 on the building
Dialogue: 0,2:14:40.40,2:14:43.23,Default,,0000,0000,0000,,and 4500 on furniture.
Dialogue: 0,2:14:43.23,2:14:46.10,Default,,0000,0000,0000,,Here you have two items.
Dialogue: 0,2:14:46.10,2:14:50.58,Default,,0000,0000,0000,,The two of them are what we call \Nthe non-current assets,
Dialogue: 0,2:14:50.58,2:14:57.78,Default,,0000,0000,0000,,so they're assets that last for more than \None accounting period.
Dialogue: 0,2:14:57.78,2:15:06.10,Default,,0000,0000,0000,,We have buildings and furniture\Nand this description is telling us
Dialogue: 0,2:15:06.10,2:15:12.60,Default,,0000,0000,0000,,that depreciation expense \Nfor the year 30th June 2019,
Dialogue: 0,2:15:12.60,2:15:15.24,Default,,0000,0000,0000,,that is the ending...
Dialogue: 0,2:15:16.72,2:15:20.34,Default,,0000,0000,0000,,That is the date of the unadjusted \Ntrial balance.
Dialogue: 0,2:15:20.34,2:15:27.20,Default,,0000,0000,0000,,The deprecieation expense is 5400 \Non the building, 4500 on furniture.
Dialogue: 0,2:15:28.59,2:15:32.16,Default,,0000,0000,0000,,No we need to think in the accounts.
Dialogue: 0,2:15:32.16,2:15:37.44,Default,,0000,0000,0000,,Depreciation expense is one account\Nso it doesn't matter how many items
Dialogue: 0,2:15:37.44,2:15:39.28,Default,,0000,0000,0000,,we are depreciating
Dialogue: 0,2:15:39.28,2:15:44.71,Default,,0000,0000,0000,,we need to add them and we will have \Nthe depreciation expense,
Dialogue: 0,2:15:44.71,2:15:46.46,Default,,0000,0000,0000,,the total depreciation expense.
Dialogue: 0,2:15:46.46,2:15:52.68,Default,,0000,0000,0000,,If you add these two amounts, \N5400 and 4500 it will be 9900
Dialogue: 0,2:15:52.68,2:15:58.60,Default,,0000,0000,0000,,so we will have a debit of depreciation \Nexpense, 9900.
Dialogue: 0,2:15:58.60,2:16:00.71,Default,,0000,0000,0000,,What is the other account?
Dialogue: 0,2:16:00.71,2:16:03.90,Default,,0000,0000,0000,,The other account is accumulated\Ndepreciation
Dialogue: 0,2:16:03.90,2:16:11.14,Default,,0000,0000,0000,,but we have one accumulated depreciation\Naccount for each item
Dialogue: 0,2:16:11.14,2:16:12.76,Default,,0000,0000,0000,,of the non-current asset.
Dialogue: 0,2:16:12.76,2:16:15.60,Default,,0000,0000,0000,,How many items do we have here?\NTwo.
Dialogue: 0,2:16:15.60,2:16:18.71,Default,,0000,0000,0000,,So we have building,\Nwe have furniture.
Dialogue: 0,2:16:18.71,2:16:23.87,Default,,0000,0000,0000,,So two different accounts, one account \Nwill be accumulated depreciation,
Dialogue: 0,2:16:23.87,2:16:29.56,Default,,0000,0000,0000,,building, the other account will be\Naccumulated depreciation furniture
Dialogue: 0,2:16:29.56,2:16:33.89,Default,,0000,0000,0000,,We need to distinguish them \Nand to record them separately.
Dialogue: 0,2:16:33.89,2:16:39.26,Default,,0000,0000,0000,,So we will have a depreciation expense\N9900, one account,
Dialogue: 0,2:16:39.26,2:16:45.09,Default,,0000,0000,0000,,and then we will have accumulated \Ndepreciation of building, 5400.
Dialogue: 0,2:16:45.09,2:16:48.99,Default,,0000,0000,0000,,Accumulated depreciation \Nof furniture, 4500.
Dialogue: 0,2:16:48.99,2:16:53.46,Default,,0000,0000,0000,,and the journal entry, the adjusting \Nentry will be this one.
Dialogue: 0,2:16:53.46,2:16:59.33,Default,,0000,0000,0000,,Here you can see 9900 depreciation\Nexpense, one account.
Dialogue: 0,2:16:59.33,2:17:01.70,Default,,0000,0000,0000,,All the depreciation expense together.
Dialogue: 0,2:17:01.70,2:17:04.08,Default,,0000,0000,0000,,But then we have two different \Naccounts,
Dialogue: 0,2:17:04.08,2:17:09.07,Default,,0000,0000,0000,,so accumulated depreciation \Nof the building, 5400,
Dialogue: 0,2:17:09.07,2:17:12.42,Default,,0000,0000,0000,,accumulated depreciation\Nof furniture, 4500.
Dialogue: 0,2:17:12.42,2:17:16.74,Default,,0000,0000,0000,,The sum of course is 9900 so...
Dialogue: 0,2:17:20.61,2:17:24.83,Default,,0000,0000,0000,,it would be okay Jade that if you \Nseparated depreciation expense
Dialogue: 0,2:17:24.96,2:17:29.98,Default,,0000,0000,0000,,but we need to think that depreciation \Nexpense is just one account.
Dialogue: 0,2:17:29.98,2:17:34.97,Default,,0000,0000,0000,,It will not cause any problem\Nbecause at the end we will have two.
Dialogue: 0,2:17:34.97,2:17:39.13,Default,,0000,0000,0000,,It's like we separate these \Nin two adjusting entries.
Dialogue: 0,2:17:39.13,2:17:42.01,Default,,0000,0000,0000,,It is possible, it's ok, \Nit's not wrong,
Dialogue: 0,2:17:42.01,2:17:46.46,Default,,0000,0000,0000,,but because we have one \Ndepreciation expense,
Dialogue: 0,2:17:46.46,2:17:48.94,Default,,0000,0000,0000,,we record them together.
Dialogue: 0,2:17:48.94,2:17:54.07,Default,,0000,0000,0000,,Now this is a journal entry for adjusting \Nentries in which you have three entries.
Dialogue: 0,2:17:54.07,2:17:58.16,Default,,0000,0000,0000,,Ok, I mentioned to you that most of \Nthe you have two entries,
Dialogue: 0,2:17:58.16,2:18:00.23,Default,,0000,0000,0000,,one debit, one credit,\Nthere could be more.
Dialogue: 0,2:18:00.23,2:18:01.20,Default,,0000,0000,0000,,this is the case.
Dialogue: 0,2:18:01.20,2:18:05.62,Default,,0000,0000,0000,,In this case you have one debit\Nand you have two credits.
Dialogue: 0,2:18:05.62,2:18:10.23,Default,,0000,0000,0000,,The important thing is any journal entry\Nor adjusting entry,
Dialogue: 0,2:18:10.23,2:18:16.04,Default,,0000,0000,0000,,the total debit should be equal to \Ntotal credits which is the case here.
Dialogue: 0,2:18:16.04,2:18:21.52,Default,,0000,0000,0000,,Ok, next one.
Dialogue: 0,2:18:22.52,2:18:25.59,Default,,0000,0000,0000,,The mortgage interest rate is 6%.
Dialogue: 0,2:18:25.59,2:18:28.62,Default,,0000,0000,0000,,The mortgage was taken out \Non 1st April.
Dialogue: 0,2:18:28.62,2:18:33.55,Default,,0000,0000,0000,,This is the only data that is given in the\Nadditional data for adjusting entries,
Dialogue: 0,2:18:33.55,2:18:39.31,Default,,0000,0000,0000,,so we need to look at the data in the\Nunadjusted trial balance to calculate this
Dialogue: 0,2:18:39.31,2:18:43.19,Default,,0000,0000,0000,,so here we know 6% is the interest rate.
Dialogue: 0,2:18:43.19,2:18:51.09,Default,,0000,0000,0000,,Always when it's given like this,\Nit's annual interest rate, ok?
Dialogue: 0,2:18:51.09,2:18:54.51,Default,,0000,0000,0000,,Annual interest rate.\NAlways this is the annual,
Dialogue: 0,2:18:54.51,2:19:00.88,Default,,0000,0000,0000,,that is the normal period for \Nthe interest rate of a mortgage.
Dialogue: 0,2:19:00.88,2:19:06.35,Default,,0000,0000,0000,,So we will need to see what is the total\Nof the mortgage
Dialogue: 0,2:19:06.35,2:19:08.46,Default,,0000,0000,0000,,so we go to our...
Dialogue: 0,2:19:13.51,2:19:15.96,Default,,0000,0000,0000,,And here you have mortgage payable.
Dialogue: 0,2:19:15.96,2:19:21.90,Default,,0000,0000,0000,,This is the unadjusted trial balance,\Nmortgage payable 210000.
Dialogue: 0,2:19:21.90,2:19:23.74,Default,,0000,0000,0000,,210000.
Dialogue: 0,2:19:23.96,2:19:30.66,Default,,0000,0000,0000,,If you multiply 210000 by 6% \Nhow much is that?
Dialogue: 0,2:19:32.02,2:19:36.08,Default,,0000,0000,0000,,12600, very well Jade,\N12600.
Dialogue: 0,2:19:36.08,2:19:40.17,Default,,0000,0000,0000,,That is the interest for the year, ok?
Dialogue: 0,2:19:40.17,2:19:46.14,Default,,0000,0000,0000,,But we need the interest for three months\Nso we divide this by 12
Dialogue: 0,2:19:46.14,2:19:48.30,Default,,0000,0000,0000,,and we will have the interest \Nper month.
Dialogue: 0,2:19:48.30,2:19:50.87,Default,,0000,0000,0000,,We multiply by 3, ok,
Dialogue: 0,2:19:50.87,2:19:56.64,Default,,0000,0000,0000,,and that is the interest for \Nthe three months
Dialogue: 0,2:19:56.84,2:20:00.95,Default,,0000,0000,0000,,and for the three months \Nwe will multiply that by three, Jade,
Dialogue: 0,2:20:00.95,2:20:06.82,Default,,0000,0000,0000,,monthly it will be 3150, ok?
Dialogue: 0,2:20:07.83,2:20:15.66,Default,,0000,0000,0000,,So 3150 is the interest expense \Nthat we need to record here.
Dialogue: 0,2:20:16.46,2:20:18.76,Default,,0000,0000,0000,,Good Jade.
Dialogue: 0,2:20:19.95,2:20:24.52,Default,,0000,0000,0000,,Ok, so interest expense 3150.
Dialogue: 0,2:20:25.100,2:20:30.58,Default,,0000,0000,0000,,Interest expense for the three months\Nand we have an interest payable
Dialogue: 0,2:20:30.58,2:20:32.45,Default,,0000,0000,0000,,because we have not paid that.
Dialogue: 0,2:20:32.45,2:20:38.52,Default,,0000,0000,0000,,So interest payable, 3150.\NThis is the adjusting entry.
Dialogue: 0,2:20:42.36,2:20:44.41,Default,,0000,0000,0000,,Next one.
Dialogue: 0,2:20:44.96,2:20:50.97,Default,,0000,0000,0000,,9000 of rent revenue paid in advance\Npertains to June.
Dialogue: 0,2:20:50.97,2:20:55.93,Default,,0000,0000,0000,,The remainder pertains to July,\Nso what does this mean?
Dialogue: 0,2:20:55.93,2:21:01.67,Default,,0000,0000,0000,,The tenant paid in advance
Dialogue: 0,2:21:03.72,2:21:06.07,Default,,0000,0000,0000,,for the rent until July,
Dialogue: 0,2:21:06.48,2:21:14.91,Default,,0000,0000,0000,,but until June the tenant already used \N$9000 of this payment
Dialogue: 0,2:21:14.91,2:21:20.83,Default,,0000,0000,0000,,because they used the office \Nor the rent.
Dialogue: 0,2:21:24.08,2:21:29.57,Default,,0000,0000,0000,,George, the previous one, \Nsorry, you're talking about the mortgage?
Dialogue: 0,2:21:29.57,2:21:32.35,Default,,0000,0000,0000,,The mortgage interest?
Dialogue: 0,2:21:35.59,2:21:38.02,Default,,0000,0000,0000,,It's that one?\NOk.
Dialogue: 0,2:21:39.42,2:21:46.56,Default,,0000,0000,0000,,Ok, yeah, I will go through that George\Nas soon as I finish this that I started
Dialogue: 0,2:21:46.56,2:21:50.71,Default,,0000,0000,0000,,so here we have the revenue \Nreceived in advance.
Dialogue: 0,2:21:51.79,2:21:57.85,Default,,0000,0000,0000,,9000, that pertains to June,\Nthat means the tenant already used this.
Dialogue: 0,2:21:58.04,2:22:03.33,Default,,0000,0000,0000,,We have provided this credit to the tenant\Nuntil June for 9000.
Dialogue: 0,2:22:03.33,2:22:09.79,Default,,0000,0000,0000,,So we need to record this income\Nbecause this is revenue
Dialogue: 0,2:22:09.79,2:22:17.32,Default,,0000,0000,0000,,and we will credit rent revenue for 9000\Nand we will debit
Dialogue: 0,2:22:17.32,2:22:22.48,Default,,0000,0000,0000,,the rent revenue received in advance \Nwhich is a liability
Dialogue: 0,2:22:22.48,2:22:25.35,Default,,0000,0000,0000,,when the tenant pays in advance \Nthe amount.
Dialogue: 0,2:22:25.35,2:22:27.37,Default,,0000,0000,0000,,So this will be...
Dialogue: 0,2:22:31.72,2:22:36.28,Default,,0000,0000,0000,,Debit rent revenue received in advance\Nwe decrease the liability
Dialogue: 0,2:22:36.28,2:22:40.80,Default,,0000,0000,0000,,because the tenant already used \Nthis building until 30th June
Dialogue: 0,2:22:40.80,2:22:45.96,Default,,0000,0000,0000,,and we record now the \Nrent revenue, ok?
Dialogue: 0,2:22:45.96,2:22:51.30,Default,,0000,0000,0000,,So that is the number five.\NI will go with the interest,
Dialogue: 0,2:22:51.30,2:22:57.68,Default,,0000,0000,0000,,the interest of the number four.\NI will go again with this.
Dialogue: 0,2:22:57.68,2:23:00.87,Default,,0000,0000,0000,,The mortgage interest rate is 6%.
Dialogue: 0,2:23:00.87,2:23:04.18,Default,,0000,0000,0000,,Please remember, always the interest \Nis per year,
Dialogue: 0,2:23:04.18,2:23:08.29,Default,,0000,0000,0000,,so we need to know how much \Nis the interest per month.
Dialogue: 0,2:23:08.29,2:23:10.31,Default,,0000,0000,0000,,How do we calculate that?
Dialogue: 0,2:23:10.31,2:23:13.57,Default,,0000,0000,0000,,Well, 6% of what?
Dialogue: 0,2:23:13.57,2:23:15.66,Default,,0000,0000,0000,,That is the thing that we need \Nto calculate.
Dialogue: 0,2:23:15.66,2:23:20.04,Default,,0000,0000,0000,,6% of the total mortgage interest...\NSorry.
Dialogue: 0,2:23:20.04,2:23:25.44,Default,,0000,0000,0000,,6% of the total mortgage that we have\Nfor this loan that we have
Dialogue: 0,2:23:25.44,2:23:31.95,Default,,0000,0000,0000,,so here you have, \Nthis is our trial balance.
Dialogue: 0,2:23:31.95,2:23:34.70,Default,,0000,0000,0000,,Remember this is our unadjusted \Ntrial balance.
Dialogue: 0,2:23:34.70,2:23:39.79,Default,,0000,0000,0000,,If we go down through the accounts\Nwe will have this mortgage payable.
Dialogue: 0,2:23:40.79,2:23:44.72,Default,,0000,0000,0000,,Credit because it's a loan,\Nit's a loan payable, it's a liability.
Dialogue: 0,2:23:45.14,2:23:50.12,Default,,0000,0000,0000,,This is the total amount we borrow,\N210000.
Dialogue: 0,2:23:50.50,2:23:54.64,Default,,0000,0000,0000,,How much is the interest per year?\N6% of this.
Dialogue: 0,2:23:55.17,2:24:02.55,Default,,0000,0000,0000,,If you calculate your 6% of 210000,\Nthen that is 12600,
Dialogue: 0,2:24:03.14,2:24:05.54,Default,,0000,0000,0000,,but that is per year.
Dialogue: 0,2:24:06.00,2:24:11.21,Default,,0000,0000,0000,,How many months is the period of time\Nhere from 1st April to 30th June?
Dialogue: 0,2:24:11.21,2:24:12.62,Default,,0000,0000,0000,,It's three months.
Dialogue: 0,2:24:13.02,2:24:18.65,Default,,0000,0000,0000,,So 210000 divided by 12, \Nsorry.
Dialogue: 0,2:24:18.71,2:24:23.86,Default,,0000,0000,0000,,210000 multiplied by 6% is 12600.
Dialogue: 0,2:24:23.86,2:24:28.07,Default,,0000,0000,0000,,12600 divided by 12, \Nthat will be per month
Dialogue: 0,2:24:28.07,2:24:32.06,Default,,0000,0000,0000,,and then we multiply by three,\Nthat will be three months.
Dialogue: 0,2:24:32.06,2:24:37.28,Default,,0000,0000,0000,,The amount is 3150.
Dialogue: 0,2:24:37.28,2:24:47.09,Default,,0000,0000,0000,,So we record that interest expense, 3150 \Nbecause it's an interest already accrued
Dialogue: 0,2:24:47.70,2:24:52.03,Default,,0000,0000,0000,,in this specific time, until 30th June, \Nthree months.
Dialogue: 0,2:24:52.03,2:24:55.84,Default,,0000,0000,0000,,And the interest payable because \Nwe had not paid that
Dialogue: 0,2:24:55.84,2:24:59.10,Default,,0000,0000,0000,,is the same amount, \N3150.
Dialogue: 0,2:24:59.10,2:25:04.99,Default,,0000,0000,0000,,We have this liability for \Nthe interest payable
Dialogue: 0,2:25:04.99,2:25:09.65,Default,,0000,0000,0000,,and we have the interest expense,\Nthat clarified the point George?
Dialogue: 0,2:25:16.27,2:25:18.49,Default,,0000,0000,0000,,Ok, excellent.
Dialogue: 0,2:25:19.66,2:25:27.34,Default,,0000,0000,0000,,Now the last adjusting entry \Nis salaries.
Dialogue: 0,2:25:27.38,2:25:28.77,Default,,0000,0000,0000,,This is a simple one.
Dialogue: 0,2:25:28.77,2:25:38.45,Default,,0000,0000,0000,,Salaries of 1800 are unpaid at 30th June.\NSo what does this mean?
Dialogue: 0,2:25:39.07,2:25:44.37,Default,,0000,0000,0000,,That means that the employees \Nalready work for this amount,
Dialogue: 0,2:25:44.37,2:25:48.61,Default,,0000,0000,0000,,1800 but the company didn't pay them.
Dialogue: 0,2:25:48.61,2:25:53.59,Default,,0000,0000,0000,,So we owe that salary, \Nso we will record the expense,
Dialogue: 0,2:25:53.59,2:25:58.14,Default,,0000,0000,0000,,salaries expense 1800,\Nand we have to record the liability
Dialogue: 0,2:25:58.14,2:26:02.46,Default,,0000,0000,0000,,because we owe the salaries,\Nthat means salaries payable,
Dialogue: 0,2:26:02.46,2:26:04.42,Default,,0000,0000,0000,,that is the liability.
Dialogue: 0,2:26:04.42,2:26:12.82,Default,,0000,0000,0000,,So debit salaries expense, 1800\Ncredit salaries payable, ok?
Dialogue: 0,2:26:16.90,2:26:23.82,Default,,0000,0000,0000,,1800. So there you have \Nthe last adjusting entry.
Dialogue: 0,2:26:23.82,2:26:27.28,Default,,0000,0000,0000,,So we've finished the adjusting\Nentries,
Dialogue: 0,2:26:27.28,2:26:30.57,Default,,0000,0000,0000,,and now we can put all of these\Nadjusting entries
Dialogue: 0,2:26:30.57,2:26:34.60,Default,,0000,0000,0000,,to the spreadsheet.
Dialogue: 0,2:26:39.52,2:26:47.05,Default,,0000,0000,0000,,So if we put them\Nto the spreadsheet,
Dialogue: 0,2:26:47.78,2:26:51.05,Default,,0000,0000,0000,,you have here all the adjustments.
Dialogue: 0,2:26:53.31,2:26:58.40,Default,,0000,0000,0000,,There is a number that you can see \Nin this column after adjustment,
Dialogue: 0,2:26:58.40,2:27:03.23,Default,,0000,0000,0000,,this is just a column \Nthat can help you to know
Dialogue: 0,2:27:03.23,2:27:07.55,Default,,0000,0000,0000,,which are the transactions that the...
Dialogue: 0,2:27:07.55,2:27:11.27,Default,,0000,0000,0000,,the adjustment that we are recording\Nin the adjustment.
Dialogue: 0,2:27:11.27,2:27:13.87,Default,,0000,0000,0000,,I will look at that,\NI will go through the first one
Dialogue: 0,2:27:13.87,2:27:18.33,Default,,0000,0000,0000,,just for you to have the reference\Nbecause we did this already.
Dialogue: 0,2:27:18.33,2:27:22.29,Default,,0000,0000,0000,,We don't need to go through all of them.
Dialogue: 0,2:27:22.29,2:27:27.30,Default,,0000,0000,0000,,In the first, this is the number one, \Nthe first adjusting entry.
Dialogue: 0,2:27:27.30,2:27:38.13,Default,,0000,0000,0000,,We record debit 2700 insurance expense,\Ncredit 2700 prepaid insurance.
Dialogue: 0,2:27:39.98,2:27:44.91,Default,,0000,0000,0000,,So prepaid insurance is a credit...\Nthere you have the number one
Dialogue: 0,2:27:44.91,2:27:47.23,Default,,0000,0000,0000,,for you to have as a reference.
Dialogue: 0,2:27:47.23,2:27:51.94,Default,,0000,0000,0000,,This is the adjusting one.\NCredit 2700
Dialogue: 0,2:27:52.24,2:27:55.95,Default,,0000,0000,0000,,and we have a debit in insurance expense,
Dialogue: 0,2:28:00.25,2:28:02.55,Default,,0000,0000,0000,,insurance expense a debit, 2700
Dialogue: 0,2:28:02.30,2:28:08.30,Default,,0000,0000,0000,,and here you can see the number one \Nagain as a reference.
Dialogue: 0,2:28:08.30,2:28:12.37,Default,,0000,0000,0000,,So all of them have a reference \Nto what transaction it is.
Dialogue: 0,2:28:12.37,2:28:17.36,Default,,0000,0000,0000,,So we can complete this table
Dialogue: 0,2:28:21.10,2:28:23.54,Default,,0000,0000,0000,,just copying all the adjustments,
Dialogue: 0,2:28:23.54,2:28:26.41,Default,,0000,0000,0000,,the debit and the credit in the \Ncorresponding account
Dialogue: 0,2:28:26.41,2:28:28.76,Default,,0000,0000,0000,,and we will complete the adjustment.
Dialogue: 0,2:28:28.76,2:28:31.65,Default,,0000,0000,0000,,Then we can prepare \Nthe adjusted trial balance
Dialogue: 0,2:28:31.65,2:28:35.60,Default,,0000,0000,0000,,the same as I explained \Nin the previous exercise.
Dialogue: 0,2:28:35.60,2:28:39.56,Default,,0000,0000,0000,,Cash for example, 15000 debit,\Nthere are no adjustments,
Dialogue: 0,2:28:39.56,2:28:44.56,Default,,0000,0000,0000,,so the adjusted trial balance \Nis 15000 debit cash.
Dialogue: 0,2:28:44.56,2:28:50.51,Default,,0000,0000,0000,,Prepaid insurance we have it there 10800\Nin the unadjusted balance,
Dialogue: 0,2:28:50.51,2:28:53.11,Default,,0000,0000,0000,,the adjustment is credit,
Dialogue: 0,2:28:53.11,2:28:56.63,Default,,0000,0000,0000,,so credit decreases the debit\Nwe need to strike this,
Dialogue: 0,2:28:56.63,2:29:01.26,Default,,0000,0000,0000,,so the adjusted trial balance \Nis debit 8100.
Dialogue: 0,2:29:02.06,2:29:06.96,Default,,0000,0000,0000,,And we continue with all the adjustments\Nuntil we have really
Dialogue: 0,2:29:06.96,2:29:11.10,Default,,0000,0000,0000,,the adjusted trial balance.
Dialogue: 0,2:29:11.71,2:29:17.42,Default,,0000,0000,0000,,So we can copy all the amounts here, \Nin the adjusted trial balance
Dialogue: 0,2:29:17.42,2:29:20.93,Default,,0000,0000,0000,,and this is our adjusted trial balance.
Dialogue: 0,2:29:20.93,2:29:24.74,Default,,0000,0000,0000,,So in the first exercise we finished\Nin this part,
Dialogue: 0,2:29:24.74,2:29:27.40,Default,,0000,0000,0000,,but now we will continue \Nwith the second part
Dialogue: 0,2:29:27.40,2:29:31.87,Default,,0000,0000,0000,,which is the closing entries.
Dialogue: 0,2:29:34.14,2:29:37.98,Default,,0000,0000,0000,,What are closing entries, \Nwhat are the closing entries?
Dialogue: 0,2:29:38.30,2:29:44.47,Default,,0000,0000,0000,,So now I will explain a bit conceptually\Nwhat are closing entries
Dialogue: 0,2:29:44.47,2:29:49.13,Default,,0000,0000,0000,,and then we will apply them \Nin this exercise.
Dialogue: 0,2:29:50.54,2:29:56.96,Default,,0000,0000,0000,,I mentioned last week that there \Nare permanent accounts
Dialogue: 0,2:29:56.96,2:29:59.09,Default,,0000,0000,0000,,from all the accounts of the company.
Dialogue: 0,2:29:59.09,2:30:04.65,Default,,0000,0000,0000,,There are permanent accounts\Nand there are temporary accounts.
Dialogue: 0,2:30:04.65,2:30:07.77,Default,,0000,0000,0000,,What is the difference between \Nthe permanent accounts
Dialogue: 0,2:30:07.77,2:30:10.40,Default,,0000,0000,0000,,and the temporary accounts?
Dialogue: 0,2:30:10.40,2:30:16.28,Default,,0000,0000,0000,,The permanent accounts are accounts \Nthat the ending balance of any period
Dialogue: 0,2:30:16.28,2:30:20.41,Default,,0000,0000,0000,,is the beginning balance \Nof the following period.
Dialogue: 0,2:30:20.41,2:30:26.19,Default,,0000,0000,0000,,So we carry forward the balance\Nof the accounts to the following period
Dialogue: 0,2:30:26.19,2:30:31.89,Default,,0000,0000,0000,,and we continue for all the \Nlife of the company with this.
Dialogue: 0,2:30:31.89,2:30:36.90,Default,,0000,0000,0000,,Ending balance becomes the opening balance\Nof the following period.
Dialogue: 0,2:30:36.90,2:30:40.88,Default,,0000,0000,0000,,If you remember when we balanced\Nthe accounts last week
Dialogue: 0,2:30:42.36,2:30:47.86,Default,,0000,0000,0000,,we ended each of the ledger accounts\Nwith what is the opening balance
Dialogue: 0,2:30:48.06,2:30:52.78,Default,,0000,0000,0000,,for the following period which was \Nending balance for the current period.
Dialogue: 0,2:30:53.22,2:30:59.72,Default,,0000,0000,0000,,So these are the permanent accounts.\NBut we have also temporary accounts.
Dialogue: 0,2:31:00.58,2:31:02.98,Default,,0000,0000,0000,,What are temporary accounts?
Dialogue: 0,2:31:02.98,2:31:08.34,Default,,0000,0000,0000,,Temporary accounts are accounts \Nthat must be closed
Dialogue: 0,2:31:08.34,2:31:10.92,Default,,0000,0000,0000,,at the end of the accounting period.
Dialogue: 0,2:31:12.42,2:31:15.06,Default,,0000,0000,0000,,Why do we have to close them?
Dialogue: 0,2:31:15.06,2:31:18.94,Default,,0000,0000,0000,,Because we want to start \Nthe following period
Dialogue: 0,2:31:18.94,2:31:25.25,Default,,0000,0000,0000,,with zero balance in each \Nof these accounts, zero balance.
Dialogue: 0,2:31:25.25,2:31:28.17,Default,,0000,0000,0000,,So we need to keep these accounts\Nwith zero balance.
Dialogue: 0,2:31:28.17,2:31:29.76,Default,,0000,0000,0000,,How can we do this?
Dialogue: 0,2:31:31.02,2:31:35.57,Default,,0000,0000,0000,,Well, we need to transfer the \Nbalance of these accounts
Dialogue: 0,2:31:35.57,2:31:37.90,Default,,0000,0000,0000,,to a permanent account.
Dialogue: 0,2:31:39.35,2:31:42.46,Default,,0000,0000,0000,,Then we can leave the account \Nin zero balance.
Dialogue: 0,2:31:42.46,2:31:49.12,Default,,0000,0000,0000,,This is very important for, \Nvery good Joshua, to retain earnings.
Dialogue: 0,2:31:49.12,2:31:53.79,Default,,0000,0000,0000,,This is very important particularly for \Nall the accounts of the income statement
Dialogue: 0,2:31:53.79,2:31:58.08,Default,,0000,0000,0000,,because we want to start \Neach accounting period
Dialogue: 0,2:31:58.08,2:32:02.12,Default,,0000,0000,0000,,with zero balances in the income \Nstatement accounts,
Dialogue: 0,2:32:02.12,2:32:05.66,Default,,0000,0000,0000,,that means all the revenues \Nand expenses account
Dialogue: 0,2:32:05.66,2:32:08.40,Default,,0000,0000,0000,,should be zero, why?
Dialogue: 0,2:32:08.40,2:32:12.81,Default,,0000,0000,0000,,Because we want to menasure\Nthe profit for the period.
Dialogue: 0,2:32:12.81,2:32:18.78,Default,,0000,0000,0000,,If we do not start from a zero balance\Nwe will not have the profit of the period
Dialogue: 0,2:32:18.78,2:32:24.55,Default,,0000,0000,0000,,we will have a mix of profit \Nof the periods and the current period, ok?
Dialogue: 0,2:32:24.55,2:32:31.87,Default,,0000,0000,0000,,So to know the profit of the period\Nwe have to start with zero balance
Dialogue: 0,2:32:31.87,2:32:33.78,Default,,0000,0000,0000,,in all of these accounts.
Dialogue: 0,2:32:33.78,2:32:39.17,Default,,0000,0000,0000,,So what are the temporary accounts?\NAll the income statement accounts.
Dialogue: 0,2:32:39.17,2:32:45.89,Default,,0000,0000,0000,,That means all the revenues accounts\Nor any other income
Dialogue: 0,2:32:45.89,2:32:49.63,Default,,0000,0000,0000,,and all the expenses accounts.
Dialogue: 0,2:32:50.24,2:32:54.16,Default,,0000,0000,0000,,All of them are temporary accounts.
Dialogue: 0,2:32:54.16,2:32:58.70,Default,,0000,0000,0000,,In addition there is one account \Nthat we add retained earnings
Dialogue: 0,2:32:58.70,2:33:02.72,Default,,0000,0000,0000,,or the equity account \Nwhich is dividends.
Dialogue: 0,2:33:02.72,2:33:08.60,Default,,0000,0000,0000,,Dividends is also very good Tamara,\Ndividends is also a temporary account
Dialogue: 0,2:33:08.60,2:33:13.28,Default,,0000,0000,0000,,and we need to close dividends\Nat the end of the accounting period.
Dialogue: 0,2:33:13.28,2:33:15.73,Default,,0000,0000,0000,,So how do we close them?
Dialogue: 0,2:33:15.73,2:33:19.96,Default,,0000,0000,0000,,Well, to know that, \Nwe can start from here,
Dialogue: 0,2:33:19.96,2:33:23.18,Default,,0000,0000,0000,,the adjusted trial balance.
Dialogue: 0,2:33:23.18,2:33:27.74,Default,,0000,0000,0000,,Now what type of account do we have here?\NAnd we always put these in this order.
Dialogue: 0,2:33:27.74,2:33:34.43,Default,,0000,0000,0000,,First we have the asset account,\Nso you have cash here, ok?
Dialogue: 0,2:33:35.02,2:33:39.04,Default,,0000,0000,0000,,Prepaid insurance, supplies, land, \Nbuilding,
Dialogue: 0,2:33:39.04,2:33:43.20,Default,,0000,0000,0000,,accumulated depreciation is an asset \Naccount even though it's a credit,
Dialogue: 0,2:33:43.20,2:33:47.64,Default,,0000,0000,0000,,but I already explained that and we will \Ngo in more detail with this account
Dialogue: 0,2:33:47.64,2:33:51.33,Default,,0000,0000,0000,,in another topic.\NThat is an asset account,
Dialogue: 0,2:33:51.33,2:33:54.24,Default,,0000,0000,0000,,same to accumulated \Ndepreciation of credit.
Dialogue: 0,2:33:54.24,2:33:58.67,Default,,0000,0000,0000,,All of these are asset accounts.
Dialogue: 0,2:33:59.09,2:34:03.71,Default,,0000,0000,0000,,After the asset account we record \Nthe liabilities account.
Dialogue: 0,2:34:03.71,2:34:09.21,Default,,0000,0000,0000,,So here you have accounts payable, \Nrent revenue received in advance,
Dialogue: 0,2:34:09.21,2:34:14.63,Default,,0000,0000,0000,,salaries payable, interest payable,\Nmortgage payable, ok?
Dialogue: 0,2:34:14.63,2:34:18.94,Default,,0000,0000,0000,,All of these are liabilities accounts.
Dialogue: 0,2:34:19.71,2:34:23.04,Default,,0000,0000,0000,,After the liabilities accounts\Nwe have the equity accounts,
Dialogue: 0,2:34:23.04,2:34:26.25,Default,,0000,0000,0000,,so we have check capital and rent revenue.
Dialogue: 0,2:34:26.25,2:34:31.38,Default,,0000,0000,0000,,These two are the equity accounts,\Nsorry, only check capital,
Dialogue: 0,2:34:31.38,2:34:33.13,Default,,0000,0000,0000,,and retained earnings.
Dialogue: 0,2:34:33.13,2:34:37.82,Default,,0000,0000,0000,,Check capital and retained earnings,\Nthat's what I mean.
Dialogue: 0,2:34:37.82,2:34:41.11,Default,,0000,0000,0000,,Check capital and retained earnings\Nare equity accounts.
Dialogue: 0,2:34:41.11,2:34:44.91,Default,,0000,0000,0000,,In this case in this company \Nwe don't have retained earnings.
Dialogue: 0,2:34:44.91,2:34:49.85,Default,,0000,0000,0000,,Why don't we have retained earnings? \NBecause this company just started, ok?
Dialogue: 0,2:34:49.85,2:34:53.90,Default,,0000,0000,0000,,It started on 1st April,\Nso this is the first period,
Dialogue: 0,2:34:53.90,2:34:56.16,Default,,0000,0000,0000,,30th June 2017.
Dialogue: 0,2:34:56.16,2:35:01.08,Default,,0000,0000,0000,,And because it's the first period we \Ndon't have yet retained earnings account.
Dialogue: 0,2:35:01.08,2:35:06.73,Default,,0000,0000,0000,,So check capital and retained earnings \Nare equity accounts.
Dialogue: 0,2:35:10.41,2:35:13.22,Default,,0000,0000,0000,,Then we have the income \Nstatement accounts.
Dialogue: 0,2:35:13.22,2:35:16.78,Default,,0000,0000,0000,,The first account that we have \Nall the revenues.
Dialogue: 0,2:35:16.78,2:35:21.51,Default,,0000,0000,0000,,Rent revenue in this case, \Nit may be service revenue,
Dialogue: 0,2:35:21.51,2:35:26.03,Default,,0000,0000,0000,,it may be sales revenue, \Nfees revenue, interest revenues,
Dialogue: 0,2:35:26.03,2:35:29.24,Default,,0000,0000,0000,,all the revenues accounts,\Nthey will be in this part.
Dialogue: 0,2:35:29.75,2:35:32.01,Default,,0000,0000,0000,,And then all the expenses accounts,
Dialogue: 0,2:35:32.01,2:35:36.23,Default,,0000,0000,0000,,so we have advertisement expense, \Ndepreciation expense,
Dialogue: 0,2:35:36.23,2:35:40.02,Default,,0000,0000,0000,,electricity expense, insurance, interest,\Nsalaries, supplies expenses,
Dialogue: 0,2:35:40.02,2:35:41.96,Default,,0000,0000,0000,,all the expense accounts.
Dialogue: 0,2:35:43.14,2:35:45.91,Default,,0000,0000,0000,,So this is the adjusted trial balance.
Dialogue: 0,2:35:45.91,2:35:48.61,Default,,0000,0000,0000,,What are the accounts that \Nwe need to close?
Dialogue: 0,2:35:48.61,2:35:54.20,Default,,0000,0000,0000,,In this case we don not have dividends,\Nwe have revenue, rent revenue,
Dialogue: 0,2:35:54.20,2:35:57.55,Default,,0000,0000,0000,,and we have all of these expenses.
Dialogue: 0,2:35:57.55,2:36:00.12,Default,,0000,0000,0000,,These are the accounts that \Nwe need to bring.
Dialogue: 0,2:36:00.12,2:36:01.52,Default,,0000,0000,0000,,How will we close this?
Dialogue: 0,2:36:01.52,2:36:06.20,Default,,0000,0000,0000,,There are two steps to close the accounts.
Dialogue: 0,2:36:06.20,2:36:13.28,Default,,0000,0000,0000,,The first step we will close \Nall the expenses and then the revenues
Dialogue: 0,2:36:13.28,2:36:18.64,Default,,0000,0000,0000,,to another temporary account \Nthat we will create
Dialogue: 0,2:36:18.64,2:36:23.63,Default,,0000,0000,0000,,that the name is the income \Nsummary account.
Dialogue: 0,2:36:24.04,2:36:29.03,Default,,0000,0000,0000,,Income summary account is the name of\Nanother temporary account
Dialogue: 0,2:36:29.03,2:36:33.13,Default,,0000,0000,0000,,and the purpose is to close \Nall the expenses
Dialogue: 0,2:36:33.13,2:36:35.68,Default,,0000,0000,0000,,and the revenues to this account.
Dialogue: 0,2:36:35.68,2:36:42.18,Default,,0000,0000,0000,,So how do we close the expense?\Nhere you have advertisement expenses,
Dialogue: 0,2:36:42.18,2:36:47.31,Default,,0000,0000,0000,,(INAUDIBLE) 3000,\Ndepreciation expense the balance
Dialogue: 0,2:36:47.31,2:36:53.37,Default,,0000,0000,0000,,is debit 9900 so we have \Na number of expenses.
Dialogue: 0,2:36:53.37,2:37:02.77,Default,,0000,0000,0000,,We add all of them and we will debit the\Nincome summary accounts for the sum
Dialogue: 0,2:37:02.77,2:37:06.56,Default,,0000,0000,0000,,and we will credit each of them \None by one
Dialogue: 0,2:37:06.56,2:37:11.26,Default,,0000,0000,0000,,we cannot credit the total of them,
Dialogue: 0,2:37:11.26,2:37:18.02,Default,,0000,0000,0000,,we need to close each account one by one\Nso we need to credit advertisement expense
Dialogue: 0,2:37:18.02,2:37:23.54,Default,,0000,0000,0000,,credit 3000,\Ndepreciation expense credit 9900.
Dialogue: 0,2:37:23.54,2:37:27.12,Default,,0000,0000,0000,,Electricity expense we credit 6000\Nand so on
Dialogue: 0,2:37:27.12,2:37:31.48,Default,,0000,0000,0000,,because if you credit advertisement \Nexpense by 3000,
Dialogue: 0,2:37:31.48,2:37:37.12,Default,,0000,0000,0000,,what is the balance of advertising expense\Nafter that? Zero.
Dialogue: 0,2:37:37.92,2:37:45.26,Default,,0000,0000,0000,,If you credit depreciation expense by 9900\Nwhat is the balance after that? Zero.
Dialogue: 0,2:37:45.98,2:37:51.26,Default,,0000,0000,0000,,We're leaving each account at zero\Nthat's why we need to do one by one.
Dialogue: 0,2:37:51.26,2:37:56.70,Default,,0000,0000,0000,,But for the sum of all of this credit\Nwe will have one debit which is
Dialogue: 0,2:37:56.70,2:38:02.49,Default,,0000,0000,0000,,the income summary account,\Nor profit and loss summary account.
Dialogue: 0,2:38:02.49,2:38:04.39,Default,,0000,0000,0000,,It could be any of these.
Dialogue: 0,2:38:06.09,2:38:08.36,Default,,0000,0000,0000,,With revenue we do the same.
Dialogue: 0,2:38:08.36,2:38:13.16,Default,,0000,0000,0000,,So to close these revenue accounts, \Nwhat we should do?
Dialogue: 0,2:38:13.58,2:38:17.03,Default,,0000,0000,0000,,We need to debit by 64200.
Dialogue: 0,2:38:17.03,2:38:23.86,Default,,0000,0000,0000,,We debit rent revenue by 64200,\Nwhat is the balance after this? Zero.
Dialogue: 0,2:38:23.86,2:38:27.51,Default,,0000,0000,0000,,And what we credit?\NIncome summary account again.
Dialogue: 0,2:38:27.51,2:38:35.77,Default,,0000,0000,0000,,So income summary account will be \Nthe same account that we use for expenses
Dialogue: 0,2:38:35.77,2:38:39.69,Default,,0000,0000,0000,,but in this case we credit the \Nincome summary account.
Dialogue: 0,2:38:39.69,2:38:44.33,Default,,0000,0000,0000,,So you can see what we have done\Nat this point is to transfer
Dialogue: 0,2:38:44.33,2:38:49.01,Default,,0000,0000,0000,,the amount of all the expenses \Nand revenues to this temporary account
Dialogue: 0,2:38:49.01,2:38:53.02,Default,,0000,0000,0000,,which is income summary account.
Dialogue: 0,2:38:58.57,2:39:02.33,Default,,0000,0000,0000,,Here you have the closing entries.
Dialogue: 0,2:39:02.85,2:39:09.05,Default,,0000,0000,0000,,We credit all of the expense accounts,\Nremember the normal balance is a debit
Dialogue: 0,2:39:09.05,2:39:13.39,Default,,0000,0000,0000,,so to close them we credit.\NThis is a journal entry.
Dialogue: 0,2:39:13.39,2:39:18.50,Default,,0000,0000,0000,,You can see this is a journal entry\Nin which we debit income summary,
Dialogue: 0,2:39:18.50,2:39:20.73,Default,,0000,0000,0000,,the sum of all the expenses.
Dialogue: 0,2:39:20.73,2:39:24.52,Default,,0000,0000,0000,,We debit income summary and \Nwe credit each of these accounts.
Dialogue: 0,2:39:24.52,2:39:27.40,Default,,0000,0000,0000,,How many entries has this journal entry?
Dialogue: 0,2:39:27.40,2:39:33.17,Default,,0000,0000,0000,,You can see it has eight entries.
Dialogue: 0,2:39:33.17,2:39:37.77,Default,,0000,0000,0000,,We have one debit, and seven credits.
Dialogue: 0,2:39:38.14,2:39:43.57,Default,,0000,0000,0000,,So this is one journal entry,\Nwith this journal entry we close
Dialogue: 0,2:39:43.57,2:39:45.99,Default,,0000,0000,0000,,all the expense accounts.
Dialogue: 0,2:39:45.99,2:39:49.66,Default,,0000,0000,0000,,That means these are closing entries.
Dialogue: 0,2:39:49.66,2:39:54.66,Default,,0000,0000,0000,,We transfer the expenses \Nto the income summary accounts.
Dialogue: 0,2:39:54.66,2:39:57.92,Default,,0000,0000,0000,,For debt revenue, the same.
Dialogue: 0,2:39:57.92,2:40:03.18,Default,,0000,0000,0000,,In this case we need to debit \Nthe revenue account
Dialogue: 0,2:40:03.18,2:40:05.82,Default,,0000,0000,0000,,because the balance is credit \Nso when we credit,
Dialogue: 0,2:40:05.82,2:40:10.58,Default,,0000,0000,0000,,we leave this account in zero,\Nand we debit the rent revenue
Dialogue: 0,2:40:10.58,2:40:14.10,Default,,0000,0000,0000,,and we credit the income \Nsummary account.
Dialogue: 0,2:40:15.18,2:40:19.81,Default,,0000,0000,0000,,This is another journal entry,\Na closing entry.
Dialogue: 0,2:40:20.56,2:40:22.60,Default,,0000,0000,0000,,What is next?
Dialogue: 0,2:40:22.98,2:40:26.36,Default,,0000,0000,0000,,Then we need to close\Nthe income summary account.
Dialogue: 0,2:40:26.36,2:40:30.02,Default,,0000,0000,0000,,What is the balance of the \Nincome summary account?
Dialogue: 0,2:40:30.02,2:40:33.47,Default,,0000,0000,0000,,The income summary account \Nis the difference
Dialogue: 0,2:40:33.60,2:40:35.23,Default,,0000,0000,0000,,between the credit and the debit .
Dialogue: 0,2:40:35.44,2:40:36.80,Default,,0000,0000,0000,,what is higher?
Dialogue: 0,2:40:36.83,2:40:43.28,Default,,0000,0000,0000,,Well, we have 64200 credit\Nand 48750 debit.
Dialogue: 0,2:40:43.73,2:40:49.34,Default,,0000,0000,0000,,so that difference is 15450 credit, ok?
Dialogue: 0,2:40:49.52,2:40:52.56,Default,,0000,0000,0000,,That is the balance of the income \Nsummary account at this point.
Dialogue: 0,2:40:52.56,2:40:57.82,Default,,0000,0000,0000,,To close that, we need to debit,\Nit is the third closing entry.
Dialogue: 0,2:40:57.82,2:41:02.81,Default,,0000,0000,0000,,We debit 15450 from the\Nincome summary account
Dialogue: 0,2:41:02.81,2:41:06.98,Default,,0000,0000,0000,,and we credit retained earnings.\NThis is a permanent account.
Dialogue: 0,2:41:06.98,2:41:11.08,Default,,0000,0000,0000,,So we transfer this balance to \Nthe retained earnings account.
Dialogue: 0,2:41:11.38,2:41:14.58,Default,,0000,0000,0000,,Now the income summary account is closed.
Dialogue: 0,2:41:14.58,2:41:17.97,Default,,0000,0000,0000,,You can verify this if you were \Nat all debit,
Dialogue: 0,2:41:17.97,2:41:24.86,Default,,0000,0000,0000,,48750 + 15450 \Nwill be equal to 64200.
Dialogue: 0,2:41:25.07,2:41:30.61,Default,,0000,0000,0000,,Income summary account is closed\Nthe ending balance in this case is zero
Dialogue: 0,2:41:30.61,2:41:33.64,Default,,0000,0000,0000,,and all the balance is transferred \Nto retained profit.
Dialogue: 0,2:41:33.64,2:41:39.82,Default,,0000,0000,0000,,You can see what we have done\Nis to transfer the profit
Dialogue: 0,2:41:39.82,2:41:43.65,Default,,0000,0000,0000,,of the accounting period through \Nthe journal entries
Dialogue: 0,2:41:43.65,2:41:45.70,Default,,0000,0000,0000,,that are the closing entries.
Dialogue: 0,2:41:45.70,2:41:49.57,Default,,0000,0000,0000,,We transfer the profit to\Nthe retained earnings
Dialogue: 0,2:41:49.57,2:41:54.96,Default,,0000,0000,0000,,an that is what we do every period\Nat the end of each period we do this.
Dialogue: 0,2:41:54.96,2:41:57.18,Default,,0000,0000,0000,,So what is retained earnings?
Dialogue: 0,2:41:57.18,2:42:03.12,Default,,0000,0000,0000,,It's the accumulation of all profits \Nand all losses since the company started
Dialogue: 0,2:42:03.12,2:42:06.59,Default,,0000,0000,0000,,because we do this at the end\Nof this period.
Dialogue: 0,2:42:07.04,2:42:11.75,Default,,0000,0000,0000,,So we are accumulating the profits \Nin this written profit account.
Dialogue: 0,2:42:11.75,2:42:13.45,Default,,0000,0000,0000,,What about dividends?
Dialogue: 0,2:42:13.45,2:42:16.71,Default,,0000,0000,0000,,Dividends is another temporary account\Nwe will see another exercise
Dialogue: 0,2:42:16.71,2:42:21.04,Default,,0000,0000,0000,,in which dividends is included\Nin the workshop exercise
Dialogue: 0,2:42:21.04,2:42:24.54,Default,,0000,0000,0000,,in which dividends is also closed \Nto retained earnings,
Dialogue: 0,2:42:24.54,2:42:27.90,Default,,0000,0000,0000,,so retained earnings are \Ndecreased by dividends.
Dialogue: 0,2:42:29.63,2:42:34.25,Default,,0000,0000,0000,,Now, one last word in relation \Nto closing entries.
Dialogue: 0,2:42:34.25,2:42:38.05,Default,,0000,0000,0000,,Closing entries you can see \Nis very simple.
Dialogue: 0,2:42:38.05,2:42:43.30,Default,,0000,0000,0000,,It's just to close each of the expense \Nand revenues accounts
Dialogue: 0,2:42:43.30,2:42:44.59,Default,,0000,0000,0000,,and also dividends,
Dialogue: 0,2:42:44.59,2:42:49.87,Default,,0000,0000,0000,,and leaving the accounts \Nwith zero balance.
Dialogue: 0,2:42:50.12,2:42:58.52,Default,,0000,0000,0000,,The normal mistake that the students do\Nin this part even is simple
Dialogue: 0,2:42:59.03,2:43:03.84,Default,,0000,0000,0000,,is the confusion between the debit\Nor the credit to close the account.
Dialogue: 0,2:43:03.84,2:43:10.94,Default,,0000,0000,0000,,So because students know that\Nexpenses are debit,
Dialogue: 0,2:43:10.94,2:43:15.26,Default,,0000,0000,0000,,they close all expense accounts \Nwith the debit here.
Dialogue: 0,2:43:15.66,2:43:19.83,Default,,0000,0000,0000,,Put the debit and put the income \Nsummary account as the credit.
Dialogue: 0,2:43:20.42,2:43:23.24,Default,,0000,0000,0000,,But that, what is the effect of that?
Dialogue: 0,2:43:23.88,2:43:27.75,Default,,0000,0000,0000,,With that, the effect that will be \Nwill be that you double
Dialogue: 0,2:43:27.75,2:43:30.36,Default,,0000,0000,0000,,the balance of each account.
Dialogue: 0,2:43:30.36,2:43:35.45,Default,,0000,0000,0000,,If you debit advertisement expenses\Nby 3000 and you have a balance of 3000
Dialogue: 0,2:43:35.45,2:43:41.09,Default,,0000,0000,0000,,what is the ending balance of \Nthe advertisement expenses? 6000.
Dialogue: 0,2:43:41.09,2:43:46.99,Default,,0000,0000,0000,,Ok, you double the balance on the account\Nyou are not closing the account.
Dialogue: 0,2:43:46.99,2:43:49.88,Default,,0000,0000,0000,,To close the account should \Nbe the opposite side,
Dialogue: 0,2:43:49.88,2:43:56.30,Default,,0000,0000,0000,,it should be you credit 3000 because \Nthe account has a balance of debit, 3000.
Dialogue: 0,2:43:56.45,2:44:01.20,Default,,0000,0000,0000,,So be careful with that, I have seen\Nso many times the same mistake.
Dialogue: 0,2:44:02.59,2:44:10.81,Default,,0000,0000,0000,,Remember that taking out on these\Nso do not make this type of mistake.
Dialogue: 0,2:44:12.29,2:44:15.01,Default,,0000,0000,0000,,Any question about closing entries?
Dialogue: 0,2:44:24.22,2:44:28.33,Default,,0000,0000,0000,,The whole point Natalia, \Nor the last part?
Dialogue: 0,2:44:31.34,2:44:35.30,Default,,0000,0000,0000,,The last part?\NExcellent, yes.
Dialogue: 0,2:44:35.89,2:44:38.76,Default,,0000,0000,0000,,Ok, excellent.
Dialogue: 0,2:44:40.18,2:44:43.57,Default,,0000,0000,0000,,For one second I thought \Nit was the whole point.
Dialogue: 0,2:44:44.12,2:44:45.96,Default,,0000,0000,0000,,Excellent.\NThank you Natalia.
Dialogue: 0,2:44:47.57,2:44:51.10,Default,,0000,0000,0000,,A common mistake, \Nwhat is the common mistake?
Dialogue: 0,2:44:51.28,2:44:55.81,Default,,0000,0000,0000,,Here we are closing the account\Nto ...
Dialogue: 0,2:44:56.27,2:45:01.35,Default,,0000,0000,0000,,Remember two things,\Nto close has a meaning.
Dialogue: 0,2:45:01.35,2:45:03.61,Default,,0000,0000,0000,,What is the meaning to close?
Dialogue: 0,2:45:03.61,2:45:10.10,Default,,0000,0000,0000,,To close means leave with zero balance\Nthat is the meaning, ok.
Dialogue: 0,2:45:10.10,2:45:13.25,Default,,0000,0000,0000,,Close means leave this account\Nwith zero balance.
Dialogue: 0,2:45:13.25,2:45:19.33,Default,,0000,0000,0000,,So if we close advertisement expense\Nit means leave this with zero balance
Dialogue: 0,2:45:19.33,2:45:20.72,Default,,0000,0000,0000,,at the end of the period.
Dialogue: 0,2:45:20.72,2:45:26.99,Default,,0000,0000,0000,,After closing entries we want \Nadvertising expense equals zero balance
Dialogue: 0,2:45:26.99,2:45:30.34,Default,,0000,0000,0000,,so that means we transfer \Nthe balance to another account.
Dialogue: 0,2:45:30.34,2:45:35.18,Default,,0000,0000,0000,,We're transferring here to income summary\Nin this first step.
Dialogue: 0,2:45:35.53,2:45:41.70,Default,,0000,0000,0000,,So what about if we have instead of,\NI will write over here,
Dialogue: 0,2:45:42.43,2:45:51.94,Default,,0000,0000,0000,,instead of credit 3000, \Nwe put 3000 here, we debit.
Dialogue: 0,2:45:53.05,2:45:56.68,Default,,0000,0000,0000,,And we do the same with \Nall the other accounts.
Dialogue: 0,2:45:57.56,2:46:03.95,Default,,0000,0000,0000,,That means that this, the income \Nsummary will not be a debit of 48000
Dialogue: 0,2:46:03.95,2:46:10.39,Default,,0000,0000,0000,,but will be a credit of 48750, ok?
Dialogue: 0,2:46:10.39,2:46:13.65,Default,,0000,0000,0000,,So what will be the effect of this?
Dialogue: 0,2:46:14.00,2:46:19.92,Default,,0000,0000,0000,,And we put here the 9900,\Nthe 6000, the 2000...
Dialogue: 0,2:46:19.92,2:46:22.26,Default,,0000,0000,0000,,All of them in debit.
Dialogue: 0,2:46:22.26,2:46:26.96,Default,,0000,0000,0000,,What is the balance of all of these \Naccounts if you do that?
Dialogue: 0,2:46:27.59,2:46:32.43,Default,,0000,0000,0000,,What is the balance after closing entries\Nif you debit this account?
Dialogue: 0,2:46:32.43,2:46:35.77,Default,,0000,0000,0000,,What will be the balance \Nof advertisement expense?
Dialogue: 0,2:46:37.40,2:46:46.66,Default,,0000,0000,0000,,It will be 6000 because the balance\Nbefore closing entries is debit 3000.
Dialogue: 0,2:46:47.56,2:46:53.62,Default,,0000,0000,0000,,If you debit in the closing entry by 3000\Nthe debit increases the debit
Dialogue: 0,2:46:53.62,2:46:57.88,Default,,0000,0000,0000,,so a debit of 3000 will be added \Nto the debit of 3000,
Dialogue: 0,2:46:57.88,2:47:01.37,Default,,0000,0000,0000,,that means now the balance is 6000.
Dialogue: 0,2:47:01.37,2:47:07.55,Default,,0000,0000,0000,,You're not closing the account, \Nyou double the balance of the account.
Dialogue: 0,2:47:07.100,2:47:14.46,Default,,0000,0000,0000,,So that's why you need to be very careful\Nthat the closing entry
Dialogue: 0,2:47:14.46,2:47:20.20,Default,,0000,0000,0000,,should be the opposite side of the \Naccounts that we are closing.
Dialogue: 0,2:47:21.83,2:47:27.75,Default,,0000,0000,0000,,All the expense accounts,\Nthey have a debit balance.
Dialogue: 0,2:47:27.75,2:47:30.36,Default,,0000,0000,0000,,What is the opposite side?\NCredit.
Dialogue: 0,2:47:30.36,2:47:33.92,Default,,0000,0000,0000,,So we need to credit all the \Nexpense accounts.
Dialogue: 0,2:47:34.56,2:47:38.98,Default,,0000,0000,0000,,The revenues accounts, \Nwhat is the normal balance? Credit.
Dialogue: 0,2:47:38.98,2:47:43.90,Default,,0000,0000,0000,,To close we need to debit, \Nthe opposite side.
Dialogue: 0,2:47:45.12,2:47:50.80,Default,,0000,0000,0000,,That is the important thing\Nso be careful with that,
Dialogue: 0,2:47:50.80,2:47:54.66,Default,,0000,0000,0000,,so do not make a mistake on this.
Dialogue: 0,2:47:57.86,2:48:09.35,Default,,0000,0000,0000,,Ok, Yes, Zijing, only need to close \Nthe temporary account.
Dialogue: 0,2:48:09.53,2:48:13.66,Default,,0000,0000,0000,,The permanent account we will \Ncarry forward the balance.
Dialogue: 0,2:48:13.66,2:48:16.38,Default,,0000,0000,0000,,The ending balance at \Nthe end of the period
Dialogue: 0,2:48:16.38,2:48:19.05,Default,,0000,0000,0000,,will be the beginning balance \Nof the next period.
Dialogue: 0,2:48:19.05,2:48:20.83,Default,,0000,0000,0000,,We do not start with a zero balance.
Dialogue: 0,2:48:20.83,2:48:24.60,Default,,0000,0000,0000,,We start with the ending balance \Nof the previous period
Dialogue: 0,2:48:24.84,2:48:29.63,Default,,0000,0000,0000,,so we only close temporary accounts.\NWhat are the temporary accounts?
Dialogue: 0,2:48:29.98,2:48:34.46,Default,,0000,0000,0000,,All the income statement accounts\Nplus dividends, ok?
Dialogue: 0,2:48:38.11,2:48:43.94,Default,,0000,0000,0000,,So we finish with this and here \Nyou have all the closing entries
Dialogue: 0,2:48:45.05,2:48:52.56,Default,,0000,0000,0000,,and that's the last part of this \Nexercise I think, yes.
Dialogue: 0,2:48:57.75,2:49:02.44,Default,,0000,0000,0000,,Yes, that was the last question \Nto prepare the closing entries.
Dialogue: 0,2:49:03.49,2:49:06.70,Default,,0000,0000,0000,,So we finish, \Njust we finish the lecture,
Dialogue: 0,2:49:06.70,2:49:12.15,Default,,0000,0000,0000,,and it is time to (INAUDIBLE)
Dialogue: 0,2:49:13.50,2:49:18.79,Default,,0000,0000,0000,,We need still to go through \Nthe workshop.
Dialogue: 0,2:49:19.65,2:49:25.17,Default,,0000,0000,0000,,Yes I did here profit and loss, \Nthere are different names for this,
Dialogue: 0,2:49:25.17,2:49:29.77,Default,,0000,0000,0000,,and over time the name has changed\Nin the accounting standards,
Dialogue: 0,2:49:29.77,2:49:37.31,Default,,0000,0000,0000,,but when we talk about income statements\Nit's the same as profit and loss statement
Dialogue: 0,2:49:37.31,2:49:43.09,Default,,0000,0000,0000,,it's the same.\NAnd we talk, there is another name,
Dialogue: 0,2:49:43.41,2:49:45.95,Default,,0000,0000,0000,,it's not very used now,\Nbut you can see in some books
Dialogue: 0,2:49:45.95,2:49:50.28,Default,,0000,0000,0000,,that there's the statement \Nof financial performance.
Dialogue: 0,2:49:50.28,2:49:53.63,Default,,0000,0000,0000,,That is also called the income statement.
Dialogue: 0,2:49:53.63,2:49:58.68,Default,,0000,0000,0000,,And the balance sheet has another name,\Nit's the statement of financial position.
Dialogue: 0,2:49:58.68,2:50:04.14,Default,,0000,0000,0000,,But for the names that we're using\Nis normally income statement
Dialogue: 0,2:50:04.14,2:50:07.72,Default,,0000,0000,0000,,or statement of profit or loss.
Dialogue: 0,2:50:08.02,2:50:10.86,Default,,0000,0000,0000,,And then we have,
Dialogue: 0,2:50:12.00,2:50:15.26,Default,,0000,0000,0000,,retained profit will always credit, right?
Dialogue: 0,2:50:15.26,2:50:17.66,Default,,0000,0000,0000,,Good question Ezekiel.
Dialogue: 0,2:50:18.96,2:50:27.07,Default,,0000,0000,0000,,Retained profit normally should be\Nand has to be in the credit side
Dialogue: 0,2:50:27.07,2:50:33.75,Default,,0000,0000,0000,,except if the company has a lot of loss\Nand then retained profit
Dialogue: 0,2:50:33.75,2:50:36.86,Default,,0000,0000,0000,,will go to the other side,\Nwe'll have a debit balance.
Dialogue: 0,2:50:36.86,2:50:40.53,Default,,0000,0000,0000,,That is a company that has \Naccumulated losses,
Dialogue: 0,2:50:40.53,2:50:43.70,Default,,0000,0000,0000,,and they don't have profit.\Nit's not the normal situation
Dialogue: 0,2:50:43.70,2:50:50.33,Default,,0000,0000,0000,,and it will be very bad for the company.\NNormally it should be on the credit side.
Dialogue: 0,2:50:51.91,2:50:56.20,Default,,0000,0000,0000,,It is possible the debit side,\Nbut not usual, and not good.
Dialogue: 0,2:51:01.20,2:51:05.24,Default,,0000,0000,0000,,Ok, so now we can go \Nthrough the workshop.
Dialogue: 0,2:51:05.24,2:51:10.04,Default,,0000,0000,0000,,So we need to plan a bit at this point\Nbecause 3.50.
Dialogue: 0,2:51:11.70,2:51:19.18,Default,,0000,0000,0000,,The normal time from 1.00-4.00\Nis the workshop and the lecture,
Dialogue: 0,2:51:19.80,2:51:22.28,Default,,0000,0000,0000,,and then 4.00-5.00 \NI have the consultation
Dialogue: 0,2:51:22.28,2:51:25.90,Default,,0000,0000,0000,,but what I am doing is just to answer \Nall the questions
Dialogue: 0,2:51:27.23,2:51:33.42,Default,,0000,0000,0000,,while I am explaining the exercise,\Nso I go through the questions immediately.
Dialogue: 0,2:51:35.66,2:51:40.19,Default,,0000,0000,0000,,That I think is better because we \Ndon't need to go back
Dialogue: 0,2:51:40.43,2:51:45.10,Default,,0000,0000,0000,,but we solve anything that you have,\Nany question you have immediately.
Dialogue: 0,2:51:45.10,2:51:48.76,Default,,0000,0000,0000,,But because we have not gone \Nthrough the workshop,
Dialogue: 0,2:51:49.75,2:51:53.50,Default,,0000,0000,0000,,I will use the consultation time\Nfor the workshop.
Dialogue: 0,2:51:53.75,2:51:58.50,Default,,0000,0000,0000,,Now I understand if any of you\Ncannot stay for the workshop,
Dialogue: 0,2:51:58.50,2:52:02.09,Default,,0000,0000,0000,,for the consultation which is 4.00-5.00,
Dialogue: 0,2:52:04.28,2:52:07.27,Default,,0000,0000,0000,,it's ok, so feel free to go,\Nno problem.
Dialogue: 0,2:52:08.36,2:52:13.23,Default,,0000,0000,0000,,Remember the lecture and the workshop\Nwill be recorded
Dialogue: 0,2:52:13.23,2:52:17.18,Default,,0000,0000,0000,,and will be uploaded \Non the ECOS 360 tab,
Dialogue: 0,2:52:17.18,2:52:21.59,Default,,0000,0000,0000,,so you will have the complete record,\Nyes and there's no problem.
Dialogue: 0,2:52:21.59,2:52:26.69,Default,,0000,0000,0000,,You will have the complete record\Nof the lecture and the workshop.
Dialogue: 0,2:52:27.11,2:52:31.08,Default,,0000,0000,0000,,So I will explain this as part \Nof the consultation,
Dialogue: 0,2:52:31.08,2:52:34.45,Default,,0000,0000,0000,,the exercise of the workshop, ok?
Dialogue: 0,2:52:35.83,2:52:41.98,Default,,0000,0000,0000,,And then if you have more questions\Nyes, please feel free to ask
Dialogue: 0,2:52:41.98,2:52:43.78,Default,,0000,0000,0000,,any question you may have.
Dialogue: 0,2:52:45.21,2:52:49.05,Default,,0000,0000,0000,,Ok, so we go through the second one.
Dialogue: 0,2:53:06.74,2:53:12.84,Default,,0000,0000,0000,,The workshop, the scheme that we have used\Nis similar to the lecture,
Dialogue: 0,2:53:12.84,2:53:17.82,Default,,0000,0000,0000,,we start with four multiple choice \Nquestions to revise some concepts
Dialogue: 0,2:53:18.16,2:53:21.12,Default,,0000,0000,0000,,and then we go through the exercise.
Dialogue: 0,2:53:21.12,2:53:27.84,Default,,0000,0000,0000,,And in the exercise we will do the same,\Nwe will practice with adjusting entries,
Dialogue: 0,2:53:27.84,2:53:34.90,Default,,0000,0000,0000,,we will practice with closing entries\Nand that is the topic for today,
Dialogue: 0,2:53:35.24,2:53:38.91,Default,,0000,0000,0000,,so a lot of practice in this.
Dialogue: 0,2:53:40.63,2:53:43.45,Default,,0000,0000,0000,,So we will start with this.
Dialogue: 0,2:53:43.45,2:53:50.04,Default,,0000,0000,0000,,I will have a look at the first question\Nwhich is similar to the first question
Dialogue: 0,2:53:50.04,2:53:51.55,Default,,0000,0000,0000,,of the lecture.
Dialogue: 0,2:53:51.82,2:53:55.02,Default,,0000,0000,0000,,Ok, have a look at this, \NI will update the poll.
Dialogue: 0,2:54:42.54,2:54:47.69,Default,,0000,0000,0000,,Ok, so furniture factory employees\Nwork overtime to finish an order
Dialogue: 0,2:54:47.69,2:54:50.68,Default,,0000,0000,0000,,that was sold on 28th February.
Dialogue: 0,2:54:50.68,2:54:54.03,Default,,0000,0000,0000,,The office sent a statement \Nto the customer in early March
Dialogue: 0,2:54:54.03,2:54:58.78,Default,,0000,0000,0000,,and the payment is received\Nby mid March.
Dialogue: 0,2:54:59.11,2:55:05.81,Default,,0000,0000,0000,,The overtime expenses should be \Nexpressed in which period?
Dialogue: 0,2:55:30.86,2:55:40.78,Default,,0000,0000,0000,,Ok, good practically most of you\Nhave the right answer,
Dialogue: 0,2:55:42.84,2:55:46.14,Default,,0000,0000,0000,,in February.\NWhy in February?
Dialogue: 0,2:55:46.14,2:55:50.62,Default,,0000,0000,0000,,Because they said that when\Nit's sold this order?
Dialogue: 0,2:55:50.62,2:55:53.45,Default,,0000,0000,0000,,On 28th February, so it's February,
Dialogue: 0,2:55:53.45,2:55:59.17,Default,,0000,0000,0000,,the month is February and \Nthe employees work during February.
Dialogue: 0,2:55:59.17,2:56:05.31,Default,,0000,0000,0000,,So the resource, \Nthat means the work of the employees
Dialogue: 0,2:56:05.31,2:56:10.60,Default,,0000,0000,0000,,was used on February,\Nthat means the right answer is that one,
Dialogue: 0,2:56:10.60,2:56:12.14,Default,,0000,0000,0000,,February, A.
Dialogue: 0,2:56:12.59,2:56:15.88,Default,,0000,0000,0000,,A is the right answer, ok?
Dialogue: 0,2:56:17.88,2:56:24.72,Default,,0000,0000,0000,,Number two, have a look, \NI will update the poll.
Dialogue: 0,2:56:38.65,2:56:45.06,Default,,0000,0000,0000,,The company purchased office supplies\Ncosting $4000 and debit office supplies
Dialogue: 0,2:56:45.06,2:56:48.45,Default,,0000,0000,0000,,for the full amount.\NAt the end of the accounting period,
Dialogue: 0,2:56:48.45,2:56:54.00,Default,,0000,0000,0000,,a critical count of supplies reveal 1600\Nis still on hand.
Dialogue: 0,2:56:54.00,2:56:55.83,Default,,0000,0000,0000,,What is the appropriate journal entry?
Dialogue: 0,2:56:55.83,2:56:59.36,Default,,0000,0000,0000,,We have done already two weeks \Naside for this,
Dialogue: 0,2:56:59.36,2:57:06.69,Default,,0000,0000,0000,,so if you understood well,\Nplease apply the same as we have done
Dialogue: 0,2:57:07.68,2:57:10.31,Default,,0000,0000,0000,,in the first two exercises.
Dialogue: 0,2:58:29.62,2:58:33.97,Default,,0000,0000,0000,,Ok, most of you correct,\Nwhat is the...
Dialogue: 0,2:58:35.53,2:58:41.38,Default,,0000,0000,0000,,The right answer is C.\NOk, why?
Dialogue: 0,2:58:42.21,2:58:47.92,Default,,0000,0000,0000,,if the company purchases office supplies\Ncosting 4000, debit all these supplies,
Dialogue: 0,2:58:47.92,2:58:50.34,Default,,0000,0000,0000,,so what is the balance of these accounts?
Dialogue: 0,2:58:50.34,2:58:56.93,Default,,0000,0000,0000,,The unadjusted balance is office supplies\Nor simply supplies, debit $4000,
Dialogue: 0,2:58:56.93,2:59:01.90,Default,,0000,0000,0000,,that is the unadjusted balance\Nbut at the end of the accounting period
Dialogue: 0,2:59:01.90,2:59:06.44,Default,,0000,0000,0000,,the physical count revealed 1600.
Dialogue: 0,2:59:06.44,2:59:10.36,Default,,0000,0000,0000,,So that is what we have \Nin the supplies account.
Dialogue: 0,2:59:10.36,2:59:13.75,Default,,0000,0000,0000,,The rest were consumed, \Nwhat's due,
Dialogue: 0,2:59:13.75,2:59:17.43,Default,,0000,0000,0000,,so we need to record a \Ndebit supplies expense
Dialogue: 0,2:59:17.43,2:59:20.59,Default,,0000,0000,0000,,by the difference, 2400,
Dialogue: 0,2:59:20.59,2:59:24.38,Default,,0000,0000,0000,,that is the difference between \N4000 and 1600.
Dialogue: 0,2:59:24.38,2:59:28.59,Default,,0000,0000,0000,,And we credit office supplies so we \Nreduced the balance of office supplies
Dialogue: 0,2:59:28.59,2:59:36.94,Default,,0000,0000,0000,,by 2400 and now what is the balance\Nafter adjustment? 1600, ok?
Dialogue: 0,2:59:37.33,2:59:41.98,Default,,0000,0000,0000,,This is the normal way that you will see\Nalways what happened
Dialogue: 0,2:59:41.98,2:59:45.25,Default,,0000,0000,0000,,with the supplies account, \Nbut there is another way
Dialogue: 0,2:59:45.25,2:59:48.50,Default,,0000,0000,0000,,that I will explain, \NI will explain it now.
Dialogue: 0,2:59:50.09,2:59:57.43,Default,,0000,0000,0000,,What about if this company purchased \Noffice supplies that cost 4000 dollars,
Dialogue: 0,2:59:57.43,3:00:04.93,Default,,0000,0000,0000,,but debit the supplies expense,\Nthe office supplies expense.
Dialogue: 0,3:00:04.93,3:00:07.48,Default,,0000,0000,0000,,So we debit, ok?
Dialogue: 0,3:00:07.48,3:00:10.20,Default,,0000,0000,0000,,And that is the journal entry \Nthat they record
Dialogue: 0,3:00:10.20,3:00:13.08,Default,,0000,0000,0000,,because they thought that they would\Nconsume all of this
Dialogue: 0,3:00:13.08,3:00:15.33,Default,,0000,0000,0000,,in this accounting period.
Dialogue: 0,3:00:15.33,3:00:20.80,Default,,0000,0000,0000,,So they debit supplies 4000.
Dialogue: 0,3:00:25.06,3:00:29.75,Default,,0000,0000,0000,,They debit supplies 4000,\Nand then credit.
Dialogue: 0,3:00:30.30,3:00:39.33,Default,,0000,0000,0000,,If they paid cash, 4000.\NThat is the original entry, ok?
Dialogue: 0,3:00:40.53,3:00:43.58,Default,,0000,0000,0000,,Supplies expense.
Dialogue: 0,3:00:46.57,3:00:52.17,Default,,0000,0000,0000,,So they debit an expense account.\NWhy do they do this?
Dialogue: 0,3:00:52.17,3:00:58.20,Default,,0000,0000,0000,,Because they think that they will consume\Nall of these supplies in the month.
Dialogue: 0,3:00:59.22,3:01:07.84,Default,,0000,0000,0000,,But at the end of the month they realize\Nthat they still have 1600 on hand.
Dialogue: 0,3:01:07.84,3:01:13.95,Default,,0000,0000,0000,,What will be the adjusting entry\Nin this case?
Dialogue: 0,3:01:16.88,3:01:19.15,Default,,0000,0000,0000,,Think a bit.
Dialogue: 0,3:01:20.58,3:01:23.86,Default,,0000,0000,0000,,And think what would be the \Nadjusting entry in this case
Dialogue: 0,3:01:23.86,3:01:28.84,Default,,0000,0000,0000,,because we need to adjust this,\Nthe expense was not 4000.
Dialogue: 0,3:01:29.08,3:01:32.90,Default,,0000,0000,0000,,It was less than 4000 because we \Nstill have 1600.
Dialogue: 0,3:01:32.90,3:01:35.14,Default,,0000,0000,0000,,We need to adjust that.
Dialogue: 0,3:01:35.14,3:01:41.21,Default,,0000,0000,0000,,What will be the adjusting entry\Nin this case if we record everything?
Dialogue: 0,3:01:41.21,3:01:46.59,Default,,0000,0000,0000,,Debit office supplies,\Nand credit supplies expenses, very good.
Dialogue: 0,3:01:47.30,3:01:51.68,Default,,0000,0000,0000,,For what amount? \NFor 1600.
Dialogue: 0,3:01:51.68,3:01:59.51,Default,,0000,0000,0000,,So we will debit office supplies 1600
Dialogue: 0,3:02:01.94,3:02:06.52,Default,,0000,0000,0000,,so now we have this, ok?
Dialogue: 0,3:02:09.36,3:02:14.74,Default,,0000,0000,0000,,1600 debit, now we have the balance,\Nand we need to credit the expense
Dialogue: 0,3:02:14.74,3:02:17.25,Default,,0000,0000,0000,,because the expense was not 4000.
Dialogue: 0,3:02:17.25,3:02:25.51,Default,,0000,0000,0000,,The expense was the difference,\Nso we will credit the expense by 1600.
Dialogue: 0,3:02:25.51,3:02:30.72,Default,,0000,0000,0000,,This is a different way to look at\Nthe supplies expenses account.
Dialogue: 0,3:02:30.72,3:02:37.14,Default,,0000,0000,0000,,It is possible, it's not frequent but it \Nis possible that this is what may happen.
Dialogue: 0,3:02:47.18,3:02:51.70,Default,,0000,0000,0000,,A full reversal if it is...\Nif it is given.
Dialogue: 0,3:02:51.86,3:02:57.46,Default,,0000,0000,0000,,It's not a reversal actually,\Nit depends on how the data is presented.
Dialogue: 0,3:02:57.46,3:03:01.35,Default,,0000,0000,0000,,For example if the data is presented\Nas I did in this exercise
Dialogue: 0,3:03:01.35,3:03:06.87,Default,,0000,0000,0000,,or all the previous ones,\Nyou only need to adjust as we have done
Dialogue: 0,3:03:06.87,3:03:12.32,Default,,0000,0000,0000,,but if the data is presented in this way\Nthat all the expenses,
Dialogue: 0,3:03:12.32,3:03:17.06,Default,,0000,0000,0000,,all the supplies purchased are recorded\Nas an expense,
Dialogue: 0,3:03:17.06,3:03:22.86,Default,,0000,0000,0000,,then the other adjustment\Nshould be reversed.
Dialogue: 0,3:03:22.86,3:03:27.85,Default,,0000,0000,0000,,What will give you the clue is \Nhow we record the purchase of this.
Dialogue: 0,3:03:27.85,3:03:33.27,Default,,0000,0000,0000,,We record as supplies, \Nor we record as supplies expense.
Dialogue: 0,3:03:33.27,3:03:35.32,Default,,0000,0000,0000,,That will make the difference.
Dialogue: 0,3:03:38.51,3:03:44.83,Default,,0000,0000,0000,,Ok, it's good to clarify this,\Nbecause I have seen an exercise
Dialogue: 0,3:03:44.83,3:03:48.82,Default,,0000,0000,0000,,in which they use the other way.
Dialogue: 0,3:03:49.65,3:03:59.03,Default,,0000,0000,0000,,We have two possibilities and \NI will put this in here.
Dialogue: 0,3:04:03.14,3:04:14.18,Default,,0000,0000,0000,,First, all purchases are\Nrecorded as supplies.
Dialogue: 0,3:04:16.78,3:04:22.34,Default,,0000,0000,0000,,Ok, all purchases are \Nrecorded as supplies.
Dialogue: 0,3:04:23.56,3:04:25.70,Default,,0000,0000,0000,,Now this you want....
Dialogue: 0,3:04:30.95,3:04:33.66,Default,,0000,0000,0000,,All purchases are recorded as supplies.
Dialogue: 0,3:04:33.69,3:04:38.35,Default,,0000,0000,0000,,What we should do when all purchases\Nare recorded as supplies,
Dialogue: 0,3:04:38.35,3:04:42.97,Default,,0000,0000,0000,,we do what you have learnt in \Nthe two previous exercises
Dialogue: 0,3:04:42.97,3:04:45.15,Default,,0000,0000,0000,,in the lecture and in this...
Dialogue: 0,3:04:45.15,3:04:50.93,Default,,0000,0000,0000,,in this multiple choice question.
Dialogue: 0,3:04:50.93,3:04:56.77,Default,,0000,0000,0000,,We adjust the ending balance \Nof supplies, ok?
Dialogue: 0,3:04:58.02,3:05:06.43,Default,,0000,0000,0000,,But what about all purchases are \Nrecorded as expenses?
Dialogue: 0,3:05:11.67,3:05:15.10,Default,,0000,0000,0000,,That is the other situation,\Nall purchases are recorded as supplies
Dialogue: 0,3:05:15.10,3:05:19.07,Default,,0000,0000,0000,,first situation we have worked with that, \Nthe second situation,
Dialogue: 0,3:05:19.07,3:05:25.100,Default,,0000,0000,0000,,all purchases are recorded as expenses\Nand we purchased $4000 of supplies
Dialogue: 0,3:05:25.100,3:05:32.29,Default,,0000,0000,0000,,and because we think that we will use \Nall of them in this accounting period
Dialogue: 0,3:05:32.29,3:05:38.57,Default,,0000,0000,0000,,we record the 4000 as supplies expense\Nwhen we purchase them.
Dialogue: 0,3:05:38.86,3:05:46.06,Default,,0000,0000,0000,,At the end of the month we have \N1600 on hand,
Dialogue: 0,3:05:46.06,3:05:51.23,Default,,0000,0000,0000,,so we didn't spend all of them.\NWe still have supplies
Dialogue: 0,3:05:51.23,3:05:54.91,Default,,0000,0000,0000,,and we need to prepare an adjusting \Nentry to reflect this.
Dialogue: 0,3:05:55.77,3:06:03.93,Default,,0000,0000,0000,,So how we will reflect in this case, we \Nwill record in this case a debit supplies
Dialogue: 0,3:06:06.97,3:06:12.93,Default,,0000,0000,0000,,1600, ok?\NWe record 1600 supplies
Dialogue: 0,3:06:14.32,3:06:23.48,Default,,0000,0000,0000,,and we credit supplies expense,\N1600.
Dialogue: 0,3:06:27.84,3:06:32.84,Default,,0000,0000,0000,,That will be the adjusting entry.\NWhat do we do with this adjusting entry?
Dialogue: 0,3:06:32.84,3:06:36.38,Default,,0000,0000,0000,,We put in supplies which is \Nan asset account,
Dialogue: 0,3:06:36.38,3:06:42.07,Default,,0000,0000,0000,,we put the amount that we have on hand\Nat the end of the period, 1600.
Dialogue: 0,3:06:42.07,3:06:48.73,Default,,0000,0000,0000,,And we reduce the supplies \Nexpense by 1600
Dialogue: 0,3:06:48.73,3:06:52.10,Default,,0000,0000,0000,,because we didn't consume\Nall of them, ok?
Dialogue: 0,3:06:52.10,3:06:57.00,Default,,0000,0000,0000,,This is the situation when purchases \Nare recorded as expenses.
Dialogue: 0,3:06:57.42,3:07:00.48,Default,,0000,0000,0000,,It's another situation, \Nit's not the most common situation
Dialogue: 0,3:07:00.48,3:07:05.75,Default,,0000,0000,0000,,but it's good that you know that \Nadjustment is to reflect
Dialogue: 0,3:07:05.75,3:07:10.19,Default,,0000,0000,0000,,what we have at the \Nend of the period, ok?
Dialogue: 0,3:07:11.18,3:07:13.65,Default,,0000,0000,0000,,It's clear now?
Dialogue: 0,3:07:18.78,3:07:20.86,Default,,0000,0000,0000,,What are the questions?
Dialogue: 0,3:07:23.68,3:07:29.10,Default,,0000,0000,0000,,Ok, Tablynn,\NTablynn please clarify the point.
Dialogue: 0,3:07:31.95,3:07:38.13,Default,,0000,0000,0000,,We go to the next one, number 3.
Dialogue: 0,3:07:41.31,3:07:45.22,Default,,0000,0000,0000,,I will update the poll, \Nthank you Tablynn.
Dialogue: 0,3:07:49.47,3:07:56.25,Default,,0000,0000,0000,,Ok, this company purchased a computer\Nfor 3000 on 1st December.
Dialogue: 0,3:07:56.25,3:08:00.88,Default,,0000,0000,0000,,It is estimated the annual depreciation\Nof the computer is $600,
Dialogue: 0,3:08:00.88,3:08:02.91,Default,,0000,0000,0000,,the annual depreciation.
Dialogue: 0,3:08:02.91,3:08:07.21,Default,,0000,0000,0000,,A financial statement had to be prepared\Non 31st December.
Dialogue: 0,3:08:07.21,3:08:09.90,Default,,0000,0000,0000,,The company should make\Nthe following adjustment.
Dialogue: 0,3:08:09.90,3:08:14.74,Default,,0000,0000,0000,,So it's not very difficult,\Nwhat is the adjusting entry in this case?
Dialogue: 0,3:08:15.01,3:08:19.08,Default,,0000,0000,0000,,Have a look at the alternatives\Nand choose one of them.
Dialogue: 0,3:09:37.83,3:09:42.25,Default,,0000,0000,0000,,Ok, are you ready?
Dialogue: 0,3:09:43.63,3:09:49.34,Default,,0000,0000,0000,,We have most of you answered correctly\Nbut we have a distribution
Dialogue: 0,3:09:49.34,3:09:52.19,Default,,0000,0000,0000,,in the answer as well.
Dialogue: 0,3:09:52.52,3:09:58.89,Default,,0000,0000,0000,,The correct answer is B.
Dialogue: 0,3:10:02.06,3:10:05.64,Default,,0000,0000,0000,,What is the, I would not say tricky,
Dialogue: 0,3:10:05.64,3:10:09.12,Default,,0000,0000,0000,,but what is the thing that you\Nneed to be careful of
Dialogue: 0,3:10:09.12,3:10:10.84,Default,,0000,0000,0000,,with the data provided?
Dialogue: 0,3:10:10.84,3:10:18.96,Default,,0000,0000,0000,,It is important and this is a good \Npractice for you for the final exam
Dialogue: 0,3:10:18.96,3:10:22.80,Default,,0000,0000,0000,,because in the final exam you will have\Nmultiple choice questions
Dialogue: 0,3:10:22.80,3:10:24.68,Default,,0000,0000,0000,,and you will have exercises.
Dialogue: 0,3:10:24.68,3:10:27.67,Default,,0000,0000,0000,,And the multiple choice questions\Nwhat is essential?
Dialogue: 0,3:10:27.67,3:10:35.20,Default,,0000,0000,0000,,In the multiple question it is to read\Ncarefully everything in the question
Dialogue: 0,3:10:35.20,3:10:40.25,Default,,0000,0000,0000,,before you choose one of the answers\Nbecause here I can see
Dialogue: 0,3:10:40.25,3:10:44.97,Default,,0000,0000,0000,,why there are some errors.
Dialogue: 0,3:10:44.97,3:10:50.11,Default,,0000,0000,0000,,It says this is the amount \Nof the computer, $3000.
Dialogue: 0,3:10:50.11,3:10:58.61,Default,,0000,0000,0000,,It is estimated annual depreciation\Nis $600, annual depreciation.
Dialogue: 0,3:10:58.95,3:11:02.51,Default,,0000,0000,0000,,Financial statements are to be prepared\Non 31st December.
Dialogue: 0,3:11:02.51,3:11:06.78,Default,,0000,0000,0000,,What is the period of time for\Nthis accounting period?
Dialogue: 0,3:11:06.78,3:11:12.10,Default,,0000,0000,0000,,It's from the 1st of December \Nto the 31st of December,
Dialogue: 0,3:11:12.10,3:11:14.80,Default,,0000,0000,0000,,that's one month.
Dialogue: 0,3:11:14.80,3:11:21.66,Default,,0000,0000,0000,,So were talking about an accounting\Nperiod of one month, exactly Joshua.
Dialogue: 0,3:11:21.66,3:11:27.47,Default,,0000,0000,0000,,One month, and here we have the \Ndepreciation of a whole year,
Dialogue: 0,3:11:27.47,3:11:30.54,Default,,0000,0000,0000,,so to calculate the depreciation \Nfor one month
Dialogue: 0,3:11:30.54,3:11:32.92,Default,,0000,0000,0000,,you need to divide this by 12.
Dialogue: 0,3:11:32.92,3:11:36.04,Default,,0000,0000,0000,,If you divide by 12 it's 50
Dialogue: 0,3:11:36.04,3:11:45.63,Default,,0000,0000,0000,,so that immediately leaves out A and E\Nand also the answer,
Dialogue: 0,3:11:45.98,3:11:49.43,Default,,0000,0000,0000,,so we're not only between B and C, ok?
Dialogue: 0,3:11:49.43,3:11:53.93,Default,,0000,0000,0000,,Now to record the depreciation expense\Ndebit always,
Dialogue: 0,3:11:53.93,3:11:57.40,Default,,0000,0000,0000,,always debit depreciation expense\Nalways it's a debit,
Dialogue: 0,3:11:57.40,3:11:59.90,Default,,0000,0000,0000,,and credit the accumulated depreciation.
Dialogue: 0,3:11:59.90,3:12:03.63,Default,,0000,0000,0000,,That's why this is the right answer, ok?
Dialogue: 0,3:12:04.03,3:12:08.87,Default,,0000,0000,0000,,So this is a good opportunity I can use\Nto explain to you how to avoid
Dialogue: 0,3:12:08.87,3:12:13.75,Default,,0000,0000,0000,,some common errors when you do this\Nin an exam,
Dialogue: 0,3:12:13.75,3:12:16.66,Default,,0000,0000,0000,,and only, maybe you know the answer,
Dialogue: 0,3:12:16.66,3:12:21.23,Default,,0000,0000,0000,,but because you didn't read \Nvery carefully the data
Dialogue: 0,3:12:21.23,3:12:22.93,Default,,0000,0000,0000,,then you can make a mistake.
Dialogue: 0,3:12:22.93,3:12:29.18,Default,,0000,0000,0000,,So be careful with these types of things\Nwhen you answer these questions.
Dialogue: 0,3:12:29.74,3:12:34.59,Default,,0000,0000,0000,,Ok, now the last multiple choice question,
Dialogue: 0,3:12:38.78,3:12:41.59,Default,,0000,0000,0000,,is this one, \NI will update the poll.
Dialogue: 0,3:12:55.52,3:13:00.48,Default,,0000,0000,0000,,An entity failed to adjust the revenue\Nreceived in advance account
Dialogue: 0,3:13:00.48,3:13:02.93,Default,,0000,0000,0000,,for rent that has been earned.
Dialogue: 0,3:13:02.93,3:13:07.59,Default,,0000,0000,0000,,What effect will this have \Non the financial statements?
Dialogue: 0,3:13:14.24,3:13:15.60,Default,,0000,0000,0000,,(COUGHS)
Dialogue: 0,3:14:33.66,3:14:39.40,Default,,0000,0000,0000,,Ok, most of you again are correct,
Dialogue: 0,3:14:40.44,3:14:43.17,Default,,0000,0000,0000,,but there are different answers as well.
Dialogue: 0,3:14:43.25,3:14:50.67,Default,,0000,0000,0000,,But the right answer is E, \Nok? That is the right answer.
Dialogue: 0,3:14:50.67,3:14:54.91,Default,,0000,0000,0000,,I will explain how to solve this \Ntype of questions,
Dialogue: 0,3:14:54.91,3:15:00.07,Default,,0000,0000,0000,,because there are many similar questions,\Nbut the question is,
Dialogue: 0,3:15:00.40,3:15:02.90,Default,,0000,0000,0000,,what is the effect on the \Nfinancial statement
Dialogue: 0,3:15:02.90,3:15:07.52,Default,,0000,0000,0000,,if an adjustment entry is not prepared?
Dialogue: 0,3:15:07.52,3:15:10.01,Default,,0000,0000,0000,,Ok, so how we answer \Nthis type of question?
Dialogue: 0,3:15:10.01,3:15:14.36,Default,,0000,0000,0000,,The best way is to go step by step.
Dialogue: 0,3:15:14.60,3:15:20.36,Default,,0000,0000,0000,,It says the entity failed to adjust \Nrevenue received in advance account
Dialogue: 0,3:15:20.36,3:15:22.96,Default,,0000,0000,0000,,for rent that has bee earned.
Dialogue: 0,3:15:23.36,3:15:26.98,Default,,0000,0000,0000,,So what happens when we have \Na revenue received in advance?
Dialogue: 0,3:15:26.98,3:15:29.96,Default,,0000,0000,0000,,Yes, it is a liability.
Dialogue: 0,3:15:30.57,3:15:34.18,Default,,0000,0000,0000,,Revenue received in advance is \Na liability account,
Dialogue: 0,3:15:34.18,3:15:41.04,Default,,0000,0000,0000,,and what happens when we earn the rent\Nand we do not adjust this liability?
Dialogue: 0,3:15:41.04,3:15:45.27,Default,,0000,0000,0000,,The adjustment means a decrease\Nof the liability.
Dialogue: 0,3:15:45.27,3:15:49.32,Default,,0000,0000,0000,,If we do not decrease the liability,\Nrevenue received in advance,
Dialogue: 0,3:15:50.88,3:15:54.32,Default,,0000,0000,0000,,these liabilities will be overstated.
Dialogue: 0,3:15:54.48,3:15:59.11,Default,,0000,0000,0000,,How many of the answers,\Nand that is the way that you can see
Dialogue: 0,3:15:59.11,3:16:02.60,Default,,0000,0000,0000,,when you are answering this type \Nof question in an exam,
Dialogue: 0,3:16:02.60,3:16:08.89,Default,,0000,0000,0000,,how many of the answers have that,\Nthat the liabilities will be overstated?
Dialogue: 0,3:16:08.89,3:16:12.57,Default,,0000,0000,0000,,Well, we have D and E only, \Nonly two,
Dialogue: 0,3:16:12.76,3:16:15.51,Default,,0000,0000,0000,,so you can discard already three.
Dialogue: 0,3:16:15.69,3:16:19.01,Default,,0000,0000,0000,,So you are going step by step\Nanswering the question,
Dialogue: 0,3:16:19.01,3:16:26.21,Default,,0000,0000,0000,,and even you don't know the second part\Nbut now your choice is only between two
Dialogue: 0,3:16:26.54,3:16:29.78,Default,,0000,0000,0000,,so a better probability \Nto have the correct answer.
Dialogue: 0,3:16:29.86,3:16:34.34,Default,,0000,0000,0000,,These are just some tricks that you \Ncan apply when you answer
Dialogue: 0,3:16:34.34,3:16:37.50,Default,,0000,0000,0000,,these types of questions, ok?
Dialogue: 0,3:16:37.50,3:16:41.68,Default,,0000,0000,0000,,So first, liabilities will be overstated\Nand what else?
Dialogue: 0,3:16:42.02,3:16:43.100,Default,,0000,0000,0000,,The difference is in revenue.
Dialogue: 0,3:16:43.100,3:16:47.15,Default,,0000,0000,0000,,What happens in revenue \Nif we do not record this?
Dialogue: 0,3:16:47.71,3:16:53.51,Default,,0000,0000,0000,,If we do not record this it means \Nwe do not record revenue already earned,
Dialogue: 0,3:16:54.25,3:17:01.86,Default,,0000,0000,0000,,so the revenue account will be understated\Nbecause we miss to record this revenue.
Dialogue: 0,3:17:02.60,3:17:05.63,Default,,0000,0000,0000,,So this will be the second part,\Nunderstated,
Dialogue: 0,3:17:05.76,3:17:09.80,Default,,0000,0000,0000,,and that's why the right answer is E.
Dialogue: 0,3:17:12.00,3:17:14.90,Default,,0000,0000,0000,,Any questions? Any conceptual questions?
Dialogue: 0,3:17:14.90,3:17:20.21,Default,,0000,0000,0000,,Because with these four questions \Nwe finished up the conceptual part.
Dialogue: 0,3:17:20.34,3:17:26.22,Default,,0000,0000,0000,,Excellent Jade, we finished all the \Nconceptual part about adjusting entries
Dialogue: 0,3:17:26.48,3:17:31.13,Default,,0000,0000,0000,,but now we will apply them again\Nin a couple of exercises.
Dialogue: 0,3:17:33.70,3:17:41.91,Default,,0000,0000,0000,,So we go through the first exercise\Nwhich is this.
Dialogue: 0,3:17:43.74,3:17:50.26,Default,,0000,0000,0000,,This company began operations \N1st February 2019
Dialogue: 0,3:17:50.26,3:17:52.78,Default,,0000,0000,0000,,and the trial balance is at 30th June.
Dialogue: 0,3:17:52.78,3:17:57.96,Default,,0000,0000,0000,,So how many months is \Nthis accounting period?
Dialogue: 0,3:17:57.96,3:18:03.83,Default,,0000,0000,0000,,The accounting period is five months, \Nvery good.
Dialogue: 0,3:18:03.83,3:18:08.69,Default,,0000,0000,0000,,We need to keep that in mind,\Nfive months is the accounting period
Dialogue: 0,3:18:08.69,3:18:13.85,Default,,0000,0000,0000,,to calculate the revenues, expenses\Nor anything that we will need.
Dialogue: 0,3:18:13.85,3:18:16.53,Default,,0000,0000,0000,,What we have here is the \Ntrial balance again,
Dialogue: 0,3:18:16.53,3:18:18.99,Default,,0000,0000,0000,,the unadjusted trial balance.
Dialogue: 0,3:18:18.99,3:18:24.69,Default,,0000,0000,0000,,We have all the debit accounts,\Nall the credit accounts.
Dialogue: 0,3:18:24.69,3:18:28.59,Default,,0000,0000,0000,,They are not all the accounts because\Nthere are other accounts here,
Dialogue: 0,3:18:28.59,3:18:34.28,Default,,0000,0000,0000,,you can see other accounts that have \Nzero balance at this moment
Dialogue: 0,3:18:34.28,3:18:38.35,Default,,0000,0000,0000,,but they are accounts of the company\Nthat we will use.
Dialogue: 0,3:18:38.35,3:18:44.31,Default,,0000,0000,0000,,And then we have the transactions,\Nnot transactions, sorry.
Dialogue: 0,3:18:45.06,3:18:49.66,Default,,0000,0000,0000,,Not transactions, \Nthe data for the adjustments.
Dialogue: 0,3:18:51.47,3:18:55.64,Default,,0000,0000,0000,,The first again we have supplies,\Nso these are similar,
Dialogue: 0,3:18:55.64,3:18:56.97,Default,,0000,0000,0000,,so I will go a bit quick,
Dialogue: 0,3:18:56.97,3:19:02.45,Default,,0000,0000,0000,,but please stop me if there's anything\Nthat you don't follow well.
Dialogue: 0,3:19:02.45,3:19:06.11,Default,,0000,0000,0000,,So supplies on hand, 490,
Dialogue: 0,3:19:06.11,3:19:10.93,Default,,0000,0000,0000,,how much we have in the \Nunadjusted trial balance?
Dialogue: 0,3:19:10.93,3:19:18.80,Default,,0000,0000,0000,,supplies, 2350, so 2350 less 490
Dialogue: 0,3:19:19.42,3:19:24.27,Default,,0000,0000,0000,,that will be 1860.
Dialogue: 0,3:19:27.56,3:19:34.23,Default,,0000,0000,0000,,Less 490 that will be 1860,
Dialogue: 0,3:19:34.23,3:19:37.00,Default,,0000,0000,0000,,so we record supplies expense \Nand supplies.
Dialogue: 0,3:19:37.00,3:19:41.43,Default,,0000,0000,0000,,We'll record expense for the \Nsupplies consumed
Dialogue: 0,3:19:41.43,3:19:45.49,Default,,0000,0000,0000,,and we decrease the balance \Nof the supplies accounts.
Dialogue: 0,3:19:47.85,3:19:52.63,Default,,0000,0000,0000,,Ok, second, electricity bill 110 \Nhas not been recorded,
Dialogue: 0,3:19:52.63,3:19:55.28,Default,,0000,0000,0000,,and will not be paid until next month.
Dialogue: 0,3:19:55.28,3:19:59.62,Default,,0000,0000,0000,,Quite similar to what we have done,\Nwe need to record the expense,
Dialogue: 0,3:19:59.62,3:20:03.19,Default,,0000,0000,0000,,electricity expense debit 110,
Dialogue: 0,3:20:03.19,3:20:08.13,Default,,0000,0000,0000,,and electricity payable credit 110.
Dialogue: 0,3:20:08.40,3:20:15.36,Default,,0000,0000,0000,,So here you have electricity expense 110,\Nelectricity payable 110.
Dialogue: 0,3:20:19.39,3:20:24.18,Default,,0000,0000,0000,,The insurance policy is for the year\Ncommencing 1st February 2019.
Dialogue: 0,3:20:24.18,3:20:27.58,Default,,0000,0000,0000,,This is the day that the company started\Nfor the year,
Dialogue: 0,3:20:27.58,3:20:30.87,Default,,0000,0000,0000,,so we need to see here how much is...
Dialogue: 0,3:20:30.87,3:20:36.38,Default,,0000,0000,0000,,prepaid insurance in total for \Na year is 2520,
Dialogue: 0,3:20:36.38,3:20:43.12,Default,,0000,0000,0000,,so if we divide this by 12\Nand we have five months in this period
Dialogue: 0,3:20:43.12,3:20:49.98,Default,,0000,0000,0000,,we will need to multiply by 5,\Nso dividing this by 12, multiplied by five
Dialogue: 0,3:20:49.98,3:20:55.88,Default,,0000,0000,0000,,the insurance expense will be 1050
Dialogue: 0,3:20:56.97,3:21:03.60,Default,,0000,0000,0000,,so we have insurance expense debit 1050
Dialogue: 0,3:21:03.60,3:21:06.95,Default,,0000,0000,0000,,credit prepaid insurance will decrease\Nthe amount that we have
Dialogue: 0,3:21:06.95,3:21:11.64,Default,,0000,0000,0000,,in prepaid insurance, 1050.
Dialogue: 0,3:21:15.42,3:21:19.68,Default,,0000,0000,0000,,Services were performed during the period\Nin relation to 800 of revenue
Dialogue: 0,3:21:19.84,3:21:22.21,Default,,0000,0000,0000,,received in advance.
Dialogue: 0,3:21:22.21,3:21:26.85,Default,,0000,0000,0000,,So we have a revenue received in advance\Nand we need to decrease that 800
Dialogue: 0,3:21:26.85,3:21:29.52,Default,,0000,0000,0000,,to record the service revenue.
Dialogue: 0,3:21:29.52,3:21:33.45,Default,,0000,0000,0000,,We will debit revenue received \Nin advance by 800,
Dialogue: 0,3:21:33.45,3:21:38.03,Default,,0000,0000,0000,,we will credit service revenue\Nby the same amount.
Dialogue: 0,3:21:40.74,3:21:45.30,Default,,0000,0000,0000,,So we debit the service revenue \Nreceived in advance, 800
Dialogue: 0,3:21:45.30,3:21:48.76,Default,,0000,0000,0000,,and we credit service revenue.
Dialogue: 0,3:21:52.82,3:21:54.41,Default,,0000,0000,0000,,Next one.
Dialogue: 0,3:21:56.28,3:21:59.88,Default,,0000,0000,0000,,Ok, yes. \NYeah, that's good.
Dialogue: 0,3:22:00.23,3:22:03.13,Default,,0000,0000,0000,,Services were perfomed during the period
Dialogue: 0,3:22:03.13,3:22:06.37,Default,,0000,0000,0000,,in relation to 800 of revenue \Nreceived in advance
Dialogue: 0,3:22:06.37,3:22:08.04,Default,,0000,0000,0000,,What does that mean?
Dialogue: 0,3:22:08.59,3:22:13.49,Default,,0000,0000,0000,,That means that previously \Nwe have received cash
Dialogue: 0,3:22:13.49,3:22:20.33,Default,,0000,0000,0000,,for services that we have not provided, \Nwe received in advance,
Dialogue: 0,3:22:20.33,3:22:23.36,Default,,0000,0000,0000,,so we record this as a liability.
Dialogue: 0,3:22:23.36,3:22:28.20,Default,,0000,0000,0000,,The liability, the name of the account\Nis service revenue received in advance
Dialogue: 0,3:22:28.20,3:22:33.47,Default,,0000,0000,0000,,and we can confirm this\Nin the trial balance.
Dialogue: 0,3:22:35.39,3:22:40.51,Default,,0000,0000,0000,,The liability here you can see\Nservice revenue received in advance.
Dialogue: 0,3:22:40.51,3:22:47.50,Default,,0000,0000,0000,,We have received cash for 1500\Nfor services we have not provided, ok?
Dialogue: 0,3:22:47.50,3:22:53.63,Default,,0000,0000,0000,,Now in this data it says services were \Nperformed during the period
Dialogue: 0,3:22:53.63,3:23:01.22,Default,,0000,0000,0000,,for 800 of this 1500 that we received cash\Nwe provide service for 800,
Dialogue: 0,3:23:01.22,3:23:05.92,Default,,0000,0000,0000,,so we will have this revenue credit\Nand we need to decrease
Dialogue: 0,3:23:05.92,3:23:11.15,Default,,0000,0000,0000,,the liability that we have\Nby the same amount, by 800.
Dialogue: 0,3:23:11.28,3:23:19.46,Default,,0000,0000,0000,,Ok, so the journal entry will be service \Nrevenue received in advance we credit
Dialogue: 0,3:23:19.46,3:23:22.81,Default,,0000,0000,0000,,so we decrease that 1500 that we have
Dialogue: 0,3:23:22.81,3:23:27.12,Default,,0000,0000,0000,,we decrease for the services\Nalready performed.
Dialogue: 0,3:23:27.47,3:23:30.66,Default,,0000,0000,0000,,And we record the service revenue credit.
Dialogue: 0,3:23:32.17,3:23:34.85,Default,,0000,0000,0000,,Now it's better George?
Dialogue: 0,3:23:42.60,3:23:45.34,Default,,0000,0000,0000,,Shouldn't we be deducting?
Dialogue: 0,3:23:45.34,3:23:47.93,Default,,0000,0000,0000,,(INAUDIBLE)
Dialogue: 0,3:23:49.86,3:23:58.23,Default,,0000,0000,0000,,Actually we are deducting 800 \Nfrom the 1500 we have with this
Dialogue: 0,3:23:58.39,3:24:04.17,Default,,0000,0000,0000,,in the debit entry because we debit.
Dialogue: 0,3:24:05.10,3:24:09.42,Default,,0000,0000,0000,,We are reducing the balance of service\Nrevenue received in advance
Dialogue: 0,3:24:09.42,3:24:13.00,Default,,0000,0000,0000,,that has a credit balance of 1500.
Dialogue: 0,3:24:14.29,3:24:21.82,Default,,0000,0000,0000,,We debit 800 because we performed\Nservices for 800,
Dialogue: 0,3:24:21.82,3:24:24.28,Default,,0000,0000,0000,,so we deduct that.
Dialogue: 0,3:24:24.28,3:24:30.76,Default,,0000,0000,0000,,With the debit entry we are reducing\Nan account that has a credit balance.
Dialogue: 0,3:24:34.39,3:24:36.92,Default,,0000,0000,0000,,Excellent, very good.
Dialogue: 0,3:24:38.04,3:24:39.74,Default,,0000,0000,0000,,You're welcome.
Dialogue: 0,3:24:39.74,3:24:45.80,Default,,0000,0000,0000,,Ok, so the next one, salaries.
Dialogue: 0,3:24:46.79,3:24:50.43,Default,,0000,0000,0000,,Salaries of 770 are owed \Nat 30th June,
Dialogue: 0,3:24:50.43,3:24:52.18,Default,,0000,0000,0000,,we have done something similar.
Dialogue: 0,3:24:52.18,3:24:57.90,Default,,0000,0000,0000,,So what are the accounts to record \Nthe expense, salaries expense 770
Dialogue: 0,3:24:57.90,3:25:00.46,Default,,0000,0000,0000,,and because we have not paid \Nthese salaries,
Dialogue: 0,3:25:00.46,3:25:05.50,Default,,0000,0000,0000,,they will be liability \Nsalaries payable, 770.
Dialogue: 0,3:25:07.66,3:25:12.38,Default,,0000,0000,0000,,Here you have salaries \Nexpense 770 debit,
Dialogue: 0,3:25:12.38,3:25:16.70,Default,,0000,0000,0000,,salaries payable liability 770.
Dialogue: 0,3:25:19.89,3:25:25.85,Default,,0000,0000,0000,,The next one, office equipment has\Na five year life with no resale value
Dialogue: 0,3:25:25.85,3:25:31.43,Default,,0000,0000,0000,,and is being depreciated at $375 \Nper month for 60 months.
Dialogue: 0,3:25:32.14,3:25:36.42,Default,,0000,0000,0000,,Ok, this is the amount per month,\Ndepreciation expense per month.
Dialogue: 0,3:25:36.42,3:25:40.04,Default,,0000,0000,0000,,But how many months do we have?\NFive months.
Dialogue: 0,3:25:40.04,3:25:45.95,Default,,0000,0000,0000,,So we need to multiply 375 by five,\Nthat is 1875
Dialogue: 0,3:25:45.95,3:25:52.15,Default,,0000,0000,0000,,so we record depreciation expense\Nhere is the adjusting entry,
Dialogue: 0,3:25:52.15,3:25:58.10,Default,,0000,0000,0000,,depreciation expense 1875 debit
Dialogue: 0,3:25:58.10,3:26:05.12,Default,,0000,0000,0000,,and we credit the accumulated \Ndepreciation office equipment 1875.
Dialogue: 0,3:26:08.34,3:26:10.38,Default,,0000,0000,0000,,And the last.
Dialogue: 0,3:26:10.84,3:26:15.95,Default,,0000,0000,0000,,Invoices representing 1500\Nof services performed during the month
Dialogue: 0,3:26:15.95,3:26:18.02,Default,,0000,0000,0000,,have not been recorded.
Dialogue: 0,3:26:18.02,3:26:25.80,Default,,0000,0000,0000,,So we provide services, we send \Nthe invoice but we have not recorded
Dialogue: 0,3:26:25.80,3:26:30.59,Default,,0000,0000,0000,,so we need to record, simply record\Nthat we have not received cash
Dialogue: 0,3:26:30.59,3:26:36.36,Default,,0000,0000,0000,,so we record a debit to \Naccounts receivable
Dialogue: 0,3:26:36.36,3:26:40.22,Default,,0000,0000,0000,,and a credit to service revenue.
Dialogue: 0,3:26:43.73,3:26:48.25,Default,,0000,0000,0000,,And here you have 1500\Ndebit account receivable,
Dialogue: 0,3:26:48.25,3:26:50.69,Default,,0000,0000,0000,,credit service revenue.
Dialogue: 0,3:26:52.60,3:26:59.52,Default,,0000,0000,0000,,So we went a bit more faster through\Nthe adjusting entry
Dialogue: 0,3:26:59.52,3:27:02.42,Default,,0000,0000,0000,,because you have seen they're \Nvery similar,
Dialogue: 0,3:27:02.42,3:27:09.37,Default,,0000,0000,0000,,so if you become accustomed with this\Nyou will do well in any adjusting entries
Dialogue: 0,3:27:09.56,3:27:12.28,Default,,0000,0000,0000,,that you may face in any exercise.
Dialogue: 0,3:27:12.28,3:27:17.46,Default,,0000,0000,0000,,They're similar once you become accustomed\Nto how to record adjusting entries,
Dialogue: 0,3:27:17.46,3:27:22.27,Default,,0000,0000,0000,,it will be easier for you to do this.
Dialogue: 0,3:27:25.60,3:27:32.17,Default,,0000,0000,0000,,Invoices...\Nsorry, what was the question reading?
Dialogue: 0,3:27:32.35,3:27:35.73,Default,,0000,0000,0000,,Invoices we did combine them.
Dialogue: 0,3:27:37.31,3:27:42.19,Default,,0000,0000,0000,,You mean in the last transaction \Nthe number seven?
Dialogue: 0,3:27:42.76,3:27:50.20,Default,,0000,0000,0000,,The number seven when it says\Ninvoices representing 1500 of services,
Dialogue: 0,3:27:50.20,3:27:55.50,Default,,0000,0000,0000,,yes, it could be one, it could be two,\Nit could be more than one,
Dialogue: 0,3:27:55.50,3:27:58.01,Default,,0000,0000,0000,,but here we put all together
Dialogue: 0,3:27:58.01,3:28:01.73,Default,,0000,0000,0000,,because all of them are \Nfor the same period
Dialogue: 0,3:28:01.73,3:28:07.71,Default,,0000,0000,0000,,so we can add them and in total \Nit's 1500.
Dialogue: 0,3:28:07.95,3:28:13.06,Default,,0000,0000,0000,,We do not record invoice by invoice\Nunless they're from different dates
Dialogue: 0,3:28:13.06,3:28:16.05,Default,,0000,0000,0000,,and we're preparing
Dialogue: 0,3:28:17.17,3:28:21.08,Default,,0000,0000,0000,,each day by day as we did last week,\Nthat is day by day,
Dialogue: 0,3:28:21.08,3:28:25.77,Default,,0000,0000,0000,,in that case we need to record each time\Nbut we're preparing adjusting entries.
Dialogue: 0,3:28:25.77,3:28:29.33,Default,,0000,0000,0000,,Adjusting entries is for the whole month
Dialogue: 0,3:28:29.33,3:28:33.42,Default,,0000,0000,0000,,so we need to include all the invoices\Nof the month, ok?
Dialogue: 0,3:28:33.42,3:28:36.70,Default,,0000,0000,0000,,Because the one point in time\Nthat we're doing this
Dialogue: 0,3:28:36.70,3:28:39.65,Default,,0000,0000,0000,,is the last day of the \Naccounting period
Dialogue: 0,3:28:39.65,3:28:42.77,Default,,0000,0000,0000,,so we add all the invoices for the month.
Dialogue: 0,3:28:47.05,3:28:52.77,Default,,0000,0000,0000,,Just because we have only one\Nservice revenue account,
Dialogue: 0,3:28:53.16,3:28:58.33,Default,,0000,0000,0000,,we have one service revenue account\Nand therefore we add them.
Dialogue: 0,3:28:59.33,3:29:06.60,Default,,0000,0000,0000,,If you remember the ledger last week,\Nwe have one service revenue account
Dialogue: 0,3:29:06.60,3:29:08.24,Default,,0000,0000,0000,,or sales revenue account.
Dialogue: 0,3:29:08.24,3:29:11.81,Default,,0000,0000,0000,,Now if we have two different accounts\Nfor example
Dialogue: 0,3:29:11.81,3:29:16.14,Default,,0000,0000,0000,,we have invoices for services \Nthat we provided
Dialogue: 0,3:29:16.14,3:29:21.45,Default,,0000,0000,0000,,and we have invoices for products \Nthat we delivered
Dialogue: 0,3:29:21.45,3:29:27.70,Default,,0000,0000,0000,,and we have one service account\Nand we have one sales revenue account,
Dialogue: 0,3:29:27.70,3:29:30.71,Default,,0000,0000,0000,,two different accounts,\None for services one for products,
Dialogue: 0,3:29:30.71,3:29:37.46,Default,,0000,0000,0000,,in that case we need to add \Nall the services invoices
Dialogue: 0,3:29:37.46,3:29:40.22,Default,,0000,0000,0000,,and to put them in the service\Nrevenue account
Dialogue: 0,3:29:40.22,3:29:44.02,Default,,0000,0000,0000,,and all the sales of products\Nand we put them in the other account
Dialogue: 0,3:29:44.02,3:29:46.48,Default,,0000,0000,0000,,in that case we need to \Nkeep them separated.
Dialogue: 0,3:29:46.48,3:29:49.27,Default,,0000,0000,0000,,But if it is only one account \Nthat we are using
Dialogue: 0,3:29:49.27,3:29:52.24,Default,,0000,0000,0000,,this is the adjusting entry,\Nwe add all of them.
Dialogue: 0,3:29:55.51,3:30:01.85,Default,,0000,0000,0000,,Ok, accounts receivable debit \Nand services performed credit
Dialogue: 0,3:30:01.85,3:30:04.71,Default,,0000,0000,0000,,for the seventh transaction.
Dialogue: 0,3:30:06.41,3:30:07.76,Default,,0000,0000,0000,,Ok, well yes.
Dialogue: 0,3:30:07.76,3:30:12.31,Default,,0000,0000,0000,,The seventh transaction we have \Na number of invoices
Dialogue: 0,3:30:12.31,3:30:14.66,Default,,0000,0000,0000,,but the total is 1500.
Dialogue: 0,3:30:14.66,3:30:16.15,Default,,0000,0000,0000,,Services performed.
Dialogue: 0,3:30:18.01,3:30:21.23,Default,,0000,0000,0000,,Invoices for services performed \Nmeans service revenue,
Dialogue: 0,3:30:21.23,3:30:25.93,Default,,0000,0000,0000,,we've earned this revenue because\Nwe provided the services
Dialogue: 0,3:30:26.28,3:30:31.75,Default,,0000,0000,0000,,so we have a credit in the account \Nof service revenue, 1500.
Dialogue: 0,3:30:31.75,3:30:35.37,Default,,0000,0000,0000,,But we have not received the cash\Nfor this.
Dialogue: 0,3:30:35.37,3:30:39.52,Default,,0000,0000,0000,,It doesn't say here that we \Nbuy services for cash
Dialogue: 0,3:30:39.52,3:30:42.23,Default,,0000,0000,0000,,so therefore it is an account receivable.
Dialogue: 0,3:30:42.49,3:30:46.37,Default,,0000,0000,0000,,We need to debit the \Naccounts receivable
Dialogue: 0,3:30:50.52,3:31:00.83,Default,,0000,0000,0000,,Ok, so once we have this,\Nall the adjusting entries recorded
Dialogue: 0,3:31:01.92,3:31:05.78,Default,,0000,0000,0000,,we can go to our worksheet
Dialogue: 0,3:31:06.03,3:31:09.28,Default,,0000,0000,0000,,and here in the worksheet, \Nthe same as we have done,
Dialogue: 0,3:31:09.28,3:31:11.65,Default,,0000,0000,0000,,we have the unadjusted trial balance.
Dialogue: 0,3:31:11.65,3:31:19.62,Default,,0000,0000,0000,,We copy all the adjtustments here and\Nwe prepare the adjusted trial balance.
Dialogue: 0,3:31:20.39,3:31:23.31,Default,,0000,0000,0000,,Ok, I will not repeat this part\Nbecause it's very simple.
Dialogue: 0,3:31:23.31,3:31:29.30,Default,,0000,0000,0000,,You know for example if you\Nhave account receivable
Dialogue: 0,3:31:29.30,3:31:35.94,Default,,0000,0000,0000,,this is the unadjusted trial balance \N3150, ok, in here.
Dialogue: 0,3:31:37.33,3:31:41.11,Default,,0000,0000,0000,,Debit and in the adjustment \Nyou have another debit.
Dialogue: 0,3:31:41.11,3:31:45.56,Default,,0000,0000,0000,,You need to add the two of them\Nto have the adjusted trial balance.
Dialogue: 0,3:31:45.100,3:31:49.87,Default,,0000,0000,0000,,If you have the prepaid insurance debit\Nand the adjustment is a credit,
Dialogue: 0,3:31:49.87,3:31:54.72,Default,,0000,0000,0000,,you need to subtract this and \Nto calculate the adjusted trial balance.
Dialogue: 0,3:31:55.23,3:31:59.60,Default,,0000,0000,0000,,So it's exactly the same as \Nwe have done before.
Dialogue: 0,3:31:59.60,3:32:05.20,Default,,0000,0000,0000,,The important thing, all of them,\Nthe unadjusted trial balance,
Dialogue: 0,3:32:05.20,3:32:07.89,Default,,0000,0000,0000,,total debit equals total credit.
Dialogue: 0,3:32:07.89,3:32:11.90,Default,,0000,0000,0000,,The adjustment, this is the sum\Nof all the adjusting entries,
Dialogue: 0,3:32:11.90,3:32:14.65,Default,,0000,0000,0000,,total debit again equals total credit.
Dialogue: 0,3:32:15.28,3:32:21.00,Default,,0000,0000,0000,,The adjusted trial balance again,\Ntotal debit again equals total credit.
Dialogue: 0,3:32:22.18,3:32:27.13,Default,,0000,0000,0000,,So always in the trial balance,\Ntotal debit equals total credit.
Dialogue: 0,3:32:27.34,3:32:32.22,Default,,0000,0000,0000,,The same as any journal entry.\NTotal debit equals total credit.
Dialogue: 0,3:32:37.10,3:32:41.87,Default,,0000,0000,0000,,So from that worksheet we can prepare \Nwhat is the adjusted trial balance
Dialogue: 0,3:32:41.87,3:32:44.85,Default,,0000,0000,0000,,at 30th June after all the adjustments
Dialogue: 0,3:32:44.85,3:32:47.55,Default,,0000,0000,0000,,and here you have the adjustment\Ntrial balance.
Dialogue: 0,3:32:47.55,3:32:51.58,Default,,0000,0000,0000,,It's just a copy of what we have \Nin the worksheet.
Dialogue: 0,3:32:55.58,3:33:02.56,Default,,0000,0000,0000,,The last problem for today is this one.
Dialogue: 0,3:33:03.55,3:33:08.00,Default,,0000,0000,0000,,Here we will start with \Nthe adjusted trial balance.
Dialogue: 0,3:33:08.61,3:33:11.78,Default,,0000,0000,0000,,If you remember the previous problem,\Nwe had started the problem
Dialogue: 0,3:33:11.78,3:33:18.17,Default,,0000,0000,0000,,with the unadjusted trial balance\Nand we prepared all the adjustments
Dialogue: 0,3:33:18.17,3:33:21.40,Default,,0000,0000,0000,,and at the end we end with \Nthe adjusted trial balance.
Dialogue: 0,3:33:21.40,3:33:26.06,Default,,0000,0000,0000,,In this problem we will start\Nwith the adjusted trial balance.
Dialogue: 0,3:33:26.06,3:33:31.49,Default,,0000,0000,0000,,So here you have the trial balance\Nafter all adjustments.
Dialogue: 0,3:33:31.49,3:33:36.16,Default,,0000,0000,0000,,All adjustments we have \Nthe trial balance.
Dialogue: 0,3:33:37.94,3:33:42.51,Default,,0000,0000,0000,,In this exercise which is a different \Nexercise of course from the previous one
Dialogue: 0,3:33:43.69,3:33:47.32,Default,,0000,0000,0000,,you can see trial balance have \Nthe same structure.
Dialogue: 0,3:33:47.72,3:33:53.22,Default,,0000,0000,0000,,We have first all the asset accounts,\Ncash, accounts receivable,
Dialogue: 0,3:33:53.22,3:33:58.06,Default,,0000,0000,0000,,office supplies, equipment,\Naccumulated depreciation equipment
Dialogue: 0,3:33:58.06,3:34:01.86,Default,,0000,0000,0000,,which is an asset account \Nbut is credit balance, ok?
Dialogue: 0,3:34:01.86,3:34:06.79,Default,,0000,0000,0000,,Then we have the liabilities, \Naccounts payable, salaries payable,
Dialogue: 0,3:34:06.79,3:34:09.97,Default,,0000,0000,0000,,interest payable, \Nrent revenue received in advance
Dialogue: 0,3:34:09.97,3:34:14.57,Default,,0000,0000,0000,,bank loans, all of these are \Nliabilities accounts.
Dialogue: 0,3:34:15.75,3:34:19.57,Default,,0000,0000,0000,,Then we have check capital \Nand retained earnings.
Dialogue: 0,3:34:19.57,3:34:22.26,Default,,0000,0000,0000,,These are equity accounts.
Dialogue: 0,3:34:23.10,3:34:27.41,Default,,0000,0000,0000,,Here we have one temporary account, \Npart of equity dividends.
Dialogue: 0,3:34:29.06,3:34:30.85,Default,,0000,0000,0000,,Why is dividends on the debit side?
Dialogue: 0,3:34:30.85,3:34:33.49,Default,,0000,0000,0000,,Because dividends decrease\Nretained earning, ok?
Dialogue: 0,3:34:33.67,3:34:36.77,Default,,0000,0000,0000,,But this is a temporary account\Nthat we need to close
Dialogue: 0,3:34:36.77,3:34:39.62,Default,,0000,0000,0000,,to retained earnings account,
Dialogue: 0,3:34:39.86,3:34:42.68,Default,,0000,0000,0000,,and then we have the income \Nstatements account.
Dialogue: 0,3:34:42.68,3:34:48.26,Default,,0000,0000,0000,,Revenues, we have two revenues accounts,\Nsales revenue and rent revenue,
Dialogue: 0,3:34:48.26,3:34:51.71,Default,,0000,0000,0000,,and we have all of these \Nexpenses accounts.
Dialogue: 0,3:34:53.34,3:34:57.46,Default,,0000,0000,0000,,And the total of course should be equal.\NTotal debit equals total credit.
Dialogue: 0,3:34:57.46,3:35:04.71,Default,,0000,0000,0000,,So the question or the exercise,\Nstart with the adjusted trial balance.
Dialogue: 0,3:35:10.20,3:35:13.06,Default,,0000,0000,0000,,What is required in this question?
Dialogue: 0,3:35:13.06,3:35:19.94,Default,,0000,0000,0000,,Prepare the closing entries and prepare\Na post closing entries trial balance,
Dialogue: 0,3:35:20.60,3:35:21.77,Default,,0000,0000,0000,,just that.
Dialogue: 0,3:35:21.97,3:35:26.36,Default,,0000,0000,0000,,Prepare closing entries and prepare\Npost closing entries trial balance
Dialogue: 0,3:35:26.36,3:35:30.22,Default,,0000,0000,0000,,starting with the adjusted trial balance.
Dialogue: 0,3:35:31.18,3:35:34.04,Default,,0000,0000,0000,,So we will return to the \Nadjusted trial balance.
Dialogue: 0,3:35:35.25,3:35:38.00,Default,,0000,0000,0000,,How will we prepare the closing entries?
Dialogue: 0,3:35:38.50,3:35:40.50,Default,,0000,0000,0000,,We will start with the expenses.
Dialogue: 0,3:35:40.86,3:35:43.59,Default,,0000,0000,0000,,Here you have all the expense accounts.
Dialogue: 0,3:35:43.84,3:35:49.95,Default,,0000,0000,0000,,How do we close these expenses?\NAll the expenses accounts?
Dialogue: 0,3:35:50.78,3:35:54.79,Default,,0000,0000,0000,,Well, the balance of these accounts \Nis debit,
Dialogue: 0,3:35:54.79,3:35:58.16,Default,,0000,0000,0000,,so to close them, \Nto leave them with zero balance
Dialogue: 0,3:35:58.16,3:36:03.01,Default,,0000,0000,0000,,we need to credit for the same amount.
Dialogue: 0,3:36:03.01,3:36:06.26,Default,,0000,0000,0000,,That is the part that I mentioned before,\Ndon't make a mistake.
Dialogue: 0,3:36:06.35,3:36:10.18,Default,,0000,0000,0000,,To close these we need to credit,\Nnot to debit.
Dialogue: 0,3:36:10.18,3:36:15.58,Default,,0000,0000,0000,,If you debit you will double the balance\Nof these accounts.
Dialogue: 0,3:36:16.15,3:36:19.62,Default,,0000,0000,0000,,So we need to credit by the same amounts.
Dialogue: 0,3:36:19.62,3:36:24.45,Default,,0000,0000,0000,,It's very simple, the journal entry.
Dialogue: 0,3:36:24.45,3:36:28.83,Default,,0000,0000,0000,,The income summary debit \Nand expenses credit, exactly George.
Dialogue: 0,3:36:28.83,3:36:30.89,Default,,0000,0000,0000,,That is the point.
Dialogue: 0,3:36:31.08,3:36:38.79,Default,,0000,0000,0000,,So the journal entry will be \Ncredit salaries expense 11340,
Dialogue: 0,3:36:38.79,3:36:44.27,Default,,0000,0000,0000,,credit rent expense 6000,\Ncredit depreciation expense,
Dialogue: 0,3:36:44.27,3:36:47.19,Default,,0000,0000,0000,,equipment 1750.
Dialogue: 0,3:36:47.19,3:36:52.51,Default,,0000,0000,0000,,Credit supplies expense 900,\Ncredit electricity expense 750.
Dialogue: 0,3:36:52.51,3:36:54.72,Default,,0000,0000,0000,,Credit interest expense 500.
Dialogue: 0,3:36:54.72,3:37:00.06,Default,,0000,0000,0000,,So you can see, you have to go one by one\Nclosing each of these accounts
Dialogue: 0,3:37:00.06,3:37:05.10,Default,,0000,0000,0000,,with a credit entry of the same amount\Nthat we have in the balance.
Dialogue: 0,3:37:05.98,3:37:10.99,Default,,0000,0000,0000,,Then you add all of these and you will \Nrecord a debit entry
Dialogue: 0,3:37:10.99,3:37:14.01,Default,,0000,0000,0000,,in the income summary account\Nfor the sum of all of that.
Dialogue: 0,3:37:14.01,3:37:18.28,Default,,0000,0000,0000,,In this case if you add this it's 20990
Dialogue: 0,3:37:18.28,3:37:26.30,Default,,0000,0000,0000,,so you record your first closing entry\Nwhich is this one.
Dialogue: 0,3:37:26.30,3:37:31.23,Default,,0000,0000,0000,,Profit and loss summary or \Nincome summary accounts, 20990,
Dialogue: 0,3:37:31.23,3:37:35.59,Default,,0000,0000,0000,,and the credit in all the\Nexpense accounts, ok?
Dialogue: 0,3:37:35.75,3:37:39.06,Default,,0000,0000,0000,,Salaries expense, rent expense, \Ndepreciation expense.
Dialogue: 0,3:37:39.06,3:37:44.66,Default,,0000,0000,0000,,After this, the balance of all of this \Nexpense accounts will be zero, ok?
Dialogue: 0,3:37:45.00,3:37:50.46,Default,,0000,0000,0000,,Because we have the same amount\Ndebits and credits so the balance is zero.
Dialogue: 0,3:37:51.93,3:37:57.56,Default,,0000,0000,0000,,Then we close the revenues accounts\Nand we have two.
Dialogue: 0,3:37:57.94,3:38:03.39,Default,,0000,0000,0000,,So we have sales revenue, \Nand we have rent revenue.
Dialogue: 0,3:38:03.39,3:38:08.92,Default,,0000,0000,0000,,Credit balance, so to close this,\Nwe need to debit for the same amount.
Dialogue: 0,3:38:08.92,3:38:12.68,Default,,0000,0000,0000,,We need to debit sales revenue,\N18600.
Dialogue: 0,3:38:12.68,3:38:17.61,Default,,0000,0000,0000,,We need to debit rent revenue 12000,\None by one again.
Dialogue: 0,3:38:17.61,3:38:20.58,Default,,0000,0000,0000,,And then we will credit the income\Nsummary account
Dialogue: 0,3:38:20.58,3:38:21.79,Default,,0000,0000,0000,,for the total.
Dialogue: 0,3:38:21.79,3:38:26.85,Default,,0000,0000,0000,,How much is the total?\N30600, the sum of these two,
Dialogue: 0,3:38:26.85,3:38:32.56,Default,,0000,0000,0000,,and we have the second closing entry\Nwhich is this.
Dialogue: 0,3:38:34.25,3:38:39.57,Default,,0000,0000,0000,,Here we have debit, the sales revenue,\Nthe rent revenue, now the balance is zero
Dialogue: 0,3:38:39.57,3:38:45.16,Default,,0000,0000,0000,,and we credit the profit and loss summary\Nor income summary account,
Dialogue: 0,3:38:45.16,3:38:48.17,Default,,0000,0000,0000,,you can put the name profit\Nand loss summary
Dialogue: 0,3:38:48.17,3:38:50.88,Default,,0000,0000,0000,,or income summary accounts, \Ncorrect.
Dialogue: 0,3:38:50.88,3:38:53.100,Default,,0000,0000,0000,,You credit by that amount.
Dialogue: 0,3:38:55.70,3:38:59.88,Default,,0000,0000,0000,,So we closed all the expenses\Nand revenue accounts.
Dialogue: 0,3:38:59.88,3:39:02.62,Default,,0000,0000,0000,,But we have opened this \Ntemporary account
Dialogue: 0,3:39:02.62,3:39:05.66,Default,,0000,0000,0000,,that is the profit and loss \Nsummary account.
Dialogue: 0,3:39:05.66,3:39:11.22,Default,,0000,0000,0000,,We need to close that because \Nit's also a temporary account.
Dialogue: 0,3:39:11.22,3:39:16.03,Default,,0000,0000,0000,,What is the balance of this account\Nafter all of these closing entries?
Dialogue: 0,3:39:16.54,3:39:21.93,Default,,0000,0000,0000,,The balance is the difference between \N30600 credit
Dialogue: 0,3:39:22.31,3:39:25.76,Default,,0000,0000,0000,,and 20990 debit,
Dialogue: 0,3:39:25.76,3:39:28.100,Default,,0000,0000,0000,,so the difference will be a credit\Nbecause this is higher,
Dialogue: 0,3:39:28.100,3:39:39.06,Default,,0000,0000,0000,,will be a credit of 9610.\NThat is the next closing entry.
Dialogue: 0,3:39:40.04,3:39:43.69,Default,,0000,0000,0000,,Because it will be a credit balance\Nwe need to debit this account
Dialogue: 0,3:39:43.86,3:39:46.57,Default,,0000,0000,0000,,by 9610.
Dialogue: 0,3:39:47.16,3:39:50.24,Default,,0000,0000,0000,,Now this account is zero, ok?
Dialogue: 0,3:39:50.37,3:39:53.09,Default,,0000,0000,0000,,The profit and loss summary account,\Nthe balance is zero,
Dialogue: 0,3:39:53.09,3:39:56.42,Default,,0000,0000,0000,,we've closed that with this debit entry?
Dialogue: 0,3:39:56.42,3:39:57.82,Default,,0000,0000,0000,,What is the credit entry?
Dialogue: 0,3:39:57.82,3:40:01.47,Default,,0000,0000,0000,,Retained earnings account \Nwhich is a permanent account.
Dialogue: 0,3:40:05.83,3:40:08.55,Default,,0000,0000,0000,,So we close all the \Nincome statement accounts
Dialogue: 0,3:40:08.55,3:40:12.03,Default,,0000,0000,0000,,and the profit and loss summary accounts\Nand we only need to close now
Dialogue: 0,3:40:12.53,3:40:20.36,Default,,0000,0000,0000,,one additional account that we have\Nin the adjusted trial balance.
Dialogue: 0,3:40:20.69,3:40:22.13,Default,,0000,0000,0000,,Yes Josh?
Dialogue: 0,3:40:22.39,3:40:27.96,Default,,0000,0000,0000,,JOSHUA: Could you explain the second last,\Nthe (INAUDIBLE)
Dialogue: 0,3:40:29.57,3:40:33.85,Default,,0000,0000,0000,,HERMAN: Sorry, I couldn't hear very well,\Ncan you repeat please?
Dialogue: 0,3:40:33.85,3:40:37.02,Default,,0000,0000,0000,,JOSHUA: Yeah, could you explain\Nthe second last transaction
Dialogue: 0,3:40:37.02,3:40:39.53,Default,,0000,0000,0000,,which was about the retained earnings?
Dialogue: 0,3:40:39.53,3:40:42.62,Default,,0000,0000,0000,,The income summary to retained earnings.
Dialogue: 0,3:40:42.62,3:40:44.22,Default,,0000,0000,0000,,HERMAN: Yes, sure, sure.
Dialogue: 0,3:40:46.75,3:40:54.79,Default,,0000,0000,0000,,Here you have the...\NHow many closing entries do we have?
Dialogue: 0,3:40:55.94,3:41:01.30,Default,,0000,0000,0000,,The first closing entry we close \Nall the expenses as I said here.
Dialogue: 0,3:41:01.71,3:41:06.08,Default,,0000,0000,0000,,All the expenses are closed\Nto profit and loss summary account.
Dialogue: 0,3:41:06.08,3:41:09.30,Default,,0000,0000,0000,,The second entry we close the revenues.
Dialogue: 0,3:41:09.30,3:41:14.09,Default,,0000,0000,0000,,So all the revenues are closed \Nto profit and loss summary account.
Dialogue: 0,3:41:14.30,3:41:20.16,Default,,0000,0000,0000,,Now we need to close the profit \Nand loss summary account.
Dialogue: 0,3:41:20.16,3:41:24.91,Default,,0000,0000,0000,,How much is the balance of \Nprofit and loss summary accounts
Dialogue: 0,3:41:24.91,3:41:28.42,Default,,0000,0000,0000,,after the first two closing entries?
Dialogue: 0,3:41:29.88,3:41:36.16,Default,,0000,0000,0000,,In the first closing entry we have \Na debit of 20990.
Dialogue: 0,3:41:37.18,3:41:42.21,Default,,0000,0000,0000,,In the second closing entry \Nwe have a credit of 30600.
Dialogue: 0,3:41:42.59,3:41:44.58,Default,,0000,0000,0000,,It's the same account, ok?
Dialogue: 0,3:41:44.58,3:41:50.25,Default,,0000,0000,0000,,So we have a credit of 30600,\Nwe have a debit of 20900,
Dialogue: 0,3:41:50.25,3:41:52.32,Default,,0000,0000,0000,,what is the balance?
Dialogue: 0,3:41:52.32,3:41:56.87,Default,,0000,0000,0000,,The balance will be a credit\Nbecause this is higher, ok?
Dialogue: 0,3:41:56.87,3:41:59.79,Default,,0000,0000,0000,,We have more credit than debit.
Dialogue: 0,3:42:00.16,3:42:04.41,Default,,0000,0000,0000,,We subtract this from the credit\Nthat we have,
Dialogue: 0,3:42:04.41,3:42:09.73,Default,,0000,0000,0000,,and the difference will be a credit\Nof 9610.
Dialogue: 0,3:42:10.89,3:42:14.57,Default,,0000,0000,0000,,That is after the second closing entry.
Dialogue: 0,3:42:14.87,3:42:20.38,Default,,0000,0000,0000,,We have a debit balance \Nin this temporary account 9610.
Dialogue: 0,3:42:20.38,3:42:23.63,Default,,0000,0000,0000,,Now we want to close that.\NHow do we close it?
Dialogue: 0,3:42:23.63,3:42:27.32,Default,,0000,0000,0000,,Because we have a debit balance,\Nwe need to credit,
Dialogue: 0,3:42:27.32,3:42:32.66,Default,,0000,0000,0000,,so we credit by that amount 9610
Dialogue: 0,3:42:32.66,3:42:38.01,Default,,0000,0000,0000,,and with that the balance of the profit \Nand loss summary account is zero now.
Dialogue: 0,3:42:38.23,3:42:43.43,Default,,0000,0000,0000,,But in this third closing entry, \Nthe other entry is retained earnings.
Dialogue: 0,3:42:44.07,3:42:49.89,Default,,0000,0000,0000,,So in retained earnings, we credit \Nretained earnings by this amount.
Dialogue: 0,3:42:50.71,3:42:54.55,Default,,0000,0000,0000,,You can see that this is the way\Nthat you transfer the profits
Dialogue: 0,3:42:54.55,3:43:00.51,Default,,0000,0000,0000,,to retained earnings because the profit\Nis revenues less expenses.
Dialogue: 0,3:43:00.51,3:43:04.19,Default,,0000,0000,0000,,That difference is included \Nin the profit and loss summary account.
Dialogue: 0,3:43:04.19,3:43:06.69,Default,,0000,0000,0000,,We've closed the revenue, \Nwe've closed expenses
Dialogue: 0,3:43:06.69,3:43:11.89,Default,,0000,0000,0000,,to profit and loss summary account\Nso we have a profit of 9610
Dialogue: 0,3:43:11.89,3:43:15.25,Default,,0000,0000,0000,,and we close that to retained earnings.
Dialogue: 0,3:43:19.63,3:43:23.84,Default,,0000,0000,0000,,And we have one more account.
Dialogue: 0,3:43:24.70,3:43:28.11,Default,,0000,0000,0000,,That is dividends.\NHere you can see dividends.
Dialogue: 0,3:43:28.11,3:43:31.75,Default,,0000,0000,0000,,They will balance 600.
Dialogue: 0,3:43:31.75,3:43:35.72,Default,,0000,0000,0000,,Dividends we know is a temporary account\Nthat decrease retained earnings,
Dialogue: 0,3:43:35.72,3:43:39.61,Default,,0000,0000,0000,,dividends are paid from retained earnings.
Dialogue: 0,3:43:39.61,3:43:42.62,Default,,0000,0000,0000,,We need to close this.\NHow do we close this?
Dialogue: 0,3:43:42.62,3:43:45.66,Default,,0000,0000,0000,,We close to retained earnings account.
Dialogue: 0,3:43:45.82,3:43:50.77,Default,,0000,0000,0000,,So to close this which has a debit balance\Nwe need to credit this account
Dialogue: 0,3:43:50.77,3:43:54.15,Default,,0000,0000,0000,,and we will debit retained earnings.
Dialogue: 0,3:43:54.15,3:43:56.88,Default,,0000,0000,0000,,You can see we've done a\Ndebit to retained earnings,
Dialogue: 0,3:43:56.88,3:43:59.61,Default,,0000,0000,0000,,decreased retained earnings.
Dialogue: 0,3:43:59.61,3:44:04.39,Default,,0000,0000,0000,,So that last closing entry
Dialogue: 0,3:44:06.51,3:44:10.68,Default,,0000,0000,0000,,in which we debit the \Nretained earnings account.
Dialogue: 0,3:44:10.68,3:44:14.84,Default,,0000,0000,0000,,600 and we credit dividends by 600.
Dialogue: 0,3:44:15.12,3:44:19.19,Default,,0000,0000,0000,,What is the balance of dividends after\Nthis closing entry? Zero
Dialogue: 0,3:44:20.11,3:44:24.99,Default,,0000,0000,0000,,And retained earnings are decreased \Nby this amount.
Dialogue: 0,3:44:25.55,3:44:33.36,Default,,0000,0000,0000,,If you think about what we've learnt\Nin the first or the second module,
Dialogue: 0,3:44:34.98,3:44:37.59,Default,,0000,0000,0000,,how the retained earnings account changed
Dialogue: 0,3:44:37.59,3:44:41.49,Default,,0000,0000,0000,,from the beginning of the period\Nuntil the end of the period,
Dialogue: 0,3:44:41.84,3:44:45.52,Default,,0000,0000,0000,,well we start with the beginning balance\Nof the retained earnings.
Dialogue: 0,3:44:46.60,3:44:50.78,Default,,0000,0000,0000,,We add the profits, we subtract \Nthe dividends
Dialogue: 0,3:44:51.37,3:44:54.51,Default,,0000,0000,0000,,and then we have the ending balance \Nof retained earnings.
Dialogue: 0,3:44:54.51,3:44:59.22,Default,,0000,0000,0000,,Now you can see how we do this\Nthrough journal entries,
Dialogue: 0,3:44:59.22,3:45:02.15,Default,,0000,0000,0000,,actually closing entries.
Dialogue: 0,3:45:02.15,3:45:05.48,Default,,0000,0000,0000,,It is exactly the same thing.
Dialogue: 0,3:45:06.44,3:45:10.46,Default,,0000,0000,0000,,So now we have the closing entries.
Dialogue: 0,3:45:12.21,3:45:17.37,Default,,0000,0000,0000,,We can prepare the post\Nclosing entries trial balance.
Dialogue: 0,3:45:19.27,3:45:23.60,Default,,0000,0000,0000,,To prepare the post closing entries\Ntrial balance is very simple
Dialogue: 0,3:45:23.60,3:45:27.17,Default,,0000,0000,0000,,and I will show you exactly \Nhow to do this
Dialogue: 0,3:45:27.17,3:45:29.57,Default,,0000,0000,0000,,from the adjusted trial balance.
Dialogue: 0,3:45:29.57,3:45:33.04,Default,,0000,0000,0000,,This is the adjusted trial balance,\Nwe start with this.
Dialogue: 0,3:45:33.04,3:45:36.12,Default,,0000,0000,0000,,What do we have in the \Nadjusted trial balance?
Dialogue: 0,3:45:36.12,3:45:40.40,Default,,0000,0000,0000,,Asset accounts, liabilities accounts,\Nequity accounts
Dialogue: 0,3:45:40.40,3:45:44.96,Default,,0000,0000,0000,,and then we have the revenues, \Nexpenses and dividends accounts
Dialogue: 0,3:45:44.96,3:45:47.02,Default,,0000,0000,0000,,that are all temporary.
Dialogue: 0,3:45:47.02,3:45:50.93,Default,,0000,0000,0000,,The post closing entry trial balance,\Nthe main difference
Dialogue: 0,3:45:50.93,3:45:56.95,Default,,0000,0000,0000,,with the adjusted trial balance is that\Nin the post closing entry trial balance
Dialogue: 0,3:45:56.95,3:46:00.49,Default,,0000,0000,0000,,you only have permanent accounts.
Dialogue: 0,3:46:01.10,3:46:04.58,Default,,0000,0000,0000,,Is there any change between\Nthe adjusted trial balance
Dialogue: 0,3:46:04.58,3:46:09.34,Default,,0000,0000,0000,,and the post closing entry trial balance\Nin the asset accounts? No.
Dialogue: 0,3:46:09.72,3:46:12.33,Default,,0000,0000,0000,,Because we didn't close any of them.
Dialogue: 0,3:46:12.33,3:46:17.79,Default,,0000,0000,0000,,In the liabilities accounts? No.\NBecause we didn't close any of them.
Dialogue: 0,3:46:18.80,3:46:22.68,Default,,0000,0000,0000,,What about equity?\NWell, in share capital no,
Dialogue: 0,3:46:22.68,3:46:25.05,Default,,0000,0000,0000,,but retained earnings yes.
Dialogue: 0,3:46:25.05,3:46:29.27,Default,,0000,0000,0000,,That is the only account\Nthat will be different
Dialogue: 0,3:46:29.27,3:46:33.90,Default,,0000,0000,0000,,in the post closing entry trial balance,\Ncompared with the adjusted trial balance.
Dialogue: 0,3:46:33.90,3:46:36.25,Default,,0000,0000,0000,,Of course the post closing \Nentry trial balance,
Dialogue: 0,3:46:36.25,3:46:41.95,Default,,0000,0000,0000,,they do not have any income \Nstatement accounts or dividend accounts.
Dialogue: 0,3:46:42.54,3:46:48.23,Default,,0000,0000,0000,,We can see easily how we calculate that\Ngoing from the retained earnings
Dialogue: 0,3:46:48.23,3:46:51.49,Default,,0000,0000,0000,,that you have here, ok?
Dialogue: 0,3:46:51.79,3:46:54.52,Default,,0000,0000,0000,,Look at here, 1500.
Dialogue: 0,3:46:54.52,3:46:58.78,Default,,0000,0000,0000,,What is that 1500 that we have...
Dialogue: 0,3:47:00.47,3:47:03.96,Default,,0000,0000,0000,,That we have in the adjusted \Ntrial balance? Retained earnings.
Dialogue: 0,3:47:04.16,3:47:11.68,Default,,0000,0000,0000,,This retained earnings balance is the\Nbeginning balance of retained earnings
Dialogue: 0,3:47:11.68,3:47:13.16,Default,,0000,0000,0000,,not the ending balance.
Dialogue: 0,3:47:13.16,3:47:17.37,Default,,0000,0000,0000,,This is not the balance at 30th June.
Dialogue: 0,3:47:18.66,3:47:21.90,Default,,0000,0000,0000,,This is the beginning balance \Nof retained earnings.
Dialogue: 0,3:47:21.90,3:47:24.29,Default,,0000,0000,0000,,Why is it the beginning balance?
Dialogue: 0,3:47:24.29,3:47:29.47,Default,,0000,0000,0000,,Because in this statement which is \Nthe adjusted trial balance
Dialogue: 0,3:47:29.47,3:47:33.18,Default,,0000,0000,0000,,you have all revenues, \Nyou have all the expenses,
Dialogue: 0,3:47:33.18,3:47:38.61,Default,,0000,0000,0000,,you have the dividends,\Nso all the accounts that affect
Dialogue: 0,3:47:38.93,3:47:42.11,Default,,0000,0000,0000,,the ending balance of retained earnings\Nare here,
Dialogue: 0,3:47:42.11,3:47:46.39,Default,,0000,0000,0000,,and because they are here,\Nthis is the beginning balance.
Dialogue: 0,3:47:46.39,3:47:52.33,Default,,0000,0000,0000,,How we transform this to the ending\Nbalance of retained earnings?
Dialogue: 0,3:47:52.33,3:47:56.83,Default,,0000,0000,0000,,First we need to add the profit.\NWhat is the profit?
Dialogue: 0,3:47:56.83,3:48:02.49,Default,,0000,0000,0000,,We calculate the profit through\Nthe profit and loss summary account.
Dialogue: 0,3:48:02.49,3:48:06.63,Default,,0000,0000,0000,,This is the profit 9610
Dialogue: 0,3:48:06.63,3:48:13.89,Default,,0000,0000,0000,,so we will need to add 1500 plus 9610
Dialogue: 0,3:48:13.89,3:48:19.57,Default,,0000,0000,0000,,and we need to deduct the dividends 600.
Dialogue: 0,3:48:19.94,3:48:24.43,Default,,0000,0000,0000,,That's why in the post closing \Nentries trial balance,
Dialogue: 0,3:48:24.43,3:48:28.82,Default,,0000,0000,0000,,all the accounts are the same \Nas the adjusting trial balance
Dialogue: 0,3:48:28.82,3:48:34.93,Default,,0000,0000,0000,,after adjustment but retained earnings\Nis 10510.
Dialogue: 0,3:48:35.23,3:48:37.01,Default,,0000,0000,0000,,How do we calculate this?
Dialogue: 0,3:48:37.01,3:48:39.68,Default,,0000,0000,0000,,This is the ending balance \Nof retained earnings.
Dialogue: 0,3:48:39.68,3:48:41.73,Default,,0000,0000,0000,,Here you have the explanation.
Dialogue: 0,3:48:41.73,3:48:47.44,Default,,0000,0000,0000,,Beginning balance 1500 that we have\Nin the adjusted trial balance
Dialogue: 0,3:48:47.44,3:48:51.77,Default,,0000,0000,0000,,plus the profit 9610
Dialogue: 0,3:48:51.77,3:48:56.24,Default,,0000,0000,0000,,which is the result of the profit \Nand loss summary account
Dialogue: 0,3:48:56.24,3:48:59.11,Default,,0000,0000,0000,,less the dividends, 600.
Dialogue: 0,3:48:59.36,3:49:02.30,Default,,0000,0000,0000,,If you calculate this you get,
Dialogue: 0,3:49:02.30,3:49:07.20,Default,,0000,0000,0000,,you will get the ending balance \Nof retained earnings
Dialogue: 0,3:49:09.46,3:49:12.20,Default,,0000,0000,0000,,And this will be the total.
Dialogue: 0,3:49:12.20,3:49:15.39,Default,,0000,0000,0000,,Total debit, total credit,\Nthat should be the same
Dialogue: 0,3:49:17.67,3:49:20.24,Default,,0000,0000,0000,,Any question?
Dialogue: 0,3:49:24.82,3:49:27.96,Default,,0000,0000,0000,,All good? \NExcellent.
Dialogue: 0,3:49:28.88,3:49:30.98,Default,,0000,0000,0000,,Excellent, we've finished.
Dialogue: 0,3:49:30.98,3:49:35.25,Default,,0000,0000,0000,,At least we finished earlier \Nthan last week.
Dialogue: 0,3:49:35.25,3:49:41.84,Default,,0000,0000,0000,,Last week was a marathon that we did
Dialogue: 0,3:49:41.84,3:49:45.74,Default,,0000,0000,0000,,but today we finished earlier \Nthan last week.
Dialogue: 0,3:49:45.74,3:49:50.13,Default,,0000,0000,0000,,But if you have any last questions\Nof course I will be happy to answer you.
Dialogue: 0,3:49:50.92,3:49:54.95,Default,,0000,0000,0000,,Anything that you would like \Nto ask or discuss?
Dialogue: 0,3:49:56.17,3:50:00.05,Default,,0000,0000,0000,,Yeah last week was a lot,\Nyes.
Dialogue: 0,3:50:01.96,3:50:04.62,Default,,0000,0000,0000,,Okay, thank you very much.
Dialogue: 0,3:50:04.82,3:50:08.70,Default,,0000,0000,0000,,Have a great evening and a great week.
Dialogue: 0,3:50:09.08,3:50:11.27,Default,,0000,0000,0000,,Ok, see you next week.
Dialogue: 0,3:50:11.27,3:50:16.74,Default,,0000,0000,0000,,Bye, thank you all of you.\NThank you.