Question & Answer: Classifying adjusting entries The following accounts were taken from the unadjusted trial balance of Orion Co., a congressional lob…..

Chapter 3 The Adjusting Process EX 3-2 Classifying adjusting entries OBJ.1 The following accounts were taken from the unadjusted trial balance of Orion Co., a con- gressional lobbying firm. Indicate whether or not each account would normally require an adjusting entry. If the account normally requires an adjusting entry, use the following notation to indicate the type of adjustment: AE-Accrued Expense AR-Accrued Revenue PE-Prepaid Expense UR-Unearned Revenue To illustrate, the answer for the first account follows: Account Answer Accounts Receivable Cash Common Stock Interest Expense Interest Receivable Land Office Equipment Prepaid Rent Supplies Unearned Fees Wages Expense Normally requires adjustment (AR).

Classifying adjusting entries The following accounts were taken from the unadjusted trial balance of Orion Co., a congressional lobbying firm. Indicate whether or not each account would normally require an adjusting entry. If the account normally requires an adjusting entry, use the following notation to indicate the type of adjustment: AE-Accrued Expense AR-Accrued Revenue PE-Prepaid Expense UR-Unearned Revenue To illustrate, the answer for the first account follows:

Expert Answer

Accounts Receivable: Normally requires adjustment (Accrued Revenue).

Cash: Does not normally require adjustment.

Common Stock: Does not normally require adjustment.

Interest Expense: Normally requires adjustment (Accrued Expense).

Interest Receivable: Normally requires adjustment (Accrued Revenue).

Land: Does not normally require adjustment.

Office Equipment: Does not normally require adjustment.

Prepaid Rent: Normally requires adjustment (Prepaid Expense).

Supplies: Normally requires adjustment (Prepaid Expense).

Unearned Fees: Normally requires adjustment (Unearned Revenue).

Wages Expense: Normally requires adjustment (Accrued Expense).

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