Question

Certain adjusting entries made at the end of an accounting period are reversed at the beginning of the following period.

Required:
Analyze the following four adjusting entries made on December 31, and determine whether a reversing entry is needed.

Certain adjusting entries made at the end of an accounting period are reversed at the beginning of the following period Required: Analyze the following four adjusting entries made on December 31, and determine whether a reversing entry is needed. Date DebitCredit Reversing entry Reversing entry Description necessary not necessary Dec. 31Rent Expense 1,000 Prepaid Rent 1,000 31 Taxes Expense 1,750 Taxes Payable 1,750 31 Deferred Rent Revenue 1,550 Rent Revenue 1,550 31 Salaries Expense 150 Salaries Payable 150

Answer 1

Reversing entries are usually made to simplify bookkeeping in the new year. For example, if an accrued expense was recorded in the previous year, the bookkeeper or accountant can reverse this entry and account for the expense in the new year when it is paid. The reversing entry erases the prior year’s accrual and the bookkeeper doesn’t have to worry about it. Thus the entries which will be reversed are:- Taxes expense    Taxes payable    2.Salaries expense    Salaries payable