1. Appendix 4A: Completing the Accounting Cycle
Chapter 4

2. Learning Objectives
Understand reversing entries (see Appendix 4A, located at myaccountinglab.com)

3. Reversing Entries: An Optional Step
Special journal entries
Ease the burden of accounting for transactions in a later period
Are the exact opposites of certain end-of -period adjustments
Used with accrual-type adjustments
Not required by GAAP

4. Accounting for Accrued Expenses
Typical journal entry at the end of a period
After posting, the accounts are updated
Typical journal entry at the end of a period

5. Making a Reversing Entry
Normal adjusting entry to accrue Salary payable
The reversing entry just reverses the debit and the credit and is dated the first day of the new period

6. Making a Reversing Entry
Notice that Salary expense account contains the $900 adjustment, but it is a credit in the account
The credit balance is eliminated on June 1, when it pays the payroll and debits Salary expense
This cash payment entry is posted as follows:

7. P4A-1A: Journalizing reversing entries
Refer to the data in Problem 4-32B.
Open accounts for Salary payable and Salary expense. Insert their unadjusted balances at January 31, 2012.
Journalize adjusting entry (e) and the closing entry for Salary expense at January 31. Post to the accounts.
On February 5, Leopard Anvils, Inc. paid the next payroll amount of $600. This payment included the accrued amount at January 31, plus $100 for the first few days of February. Journalize this cash payment, and post to the accounts. Show the balance in each account.
Using a reversing entry, repeat Requirements 1–3. Compare the balances of Salary payable and Salary expense after using a reversing entry with those balances computed without the reversing entry (as they appear in your answer to Requirement 3).

8. P4A-1A: Journalizing reversing entries
Requirement 1:
Unadjusted balance at the end of October 31, 2012
Salary payable
Salary expense

9. P4A-1A : Journalizing reversing entries
Requirement 2:
At the end of month adjusting and journal entries:
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT

10. P4A-1A: Journalizing reversing entries
Adjusting and closing entries
Salary payable
Salary expense

11. P4A-1A : Journalizing reversing entries
Requirement 3
The following month, November, 2012:
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT

12. P4A-1A : Journalizing reversing entries
Cash payment for salary expense:
Cash
Salary payable
Salary expense

13. P4A-1A : Journalizing reversing entries
Requirement 4 Situation: Using Reversing entry, repeat Req
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT

14. P4A-1A: Journalizing reversing entries
Salary payable
Salary expense

16. Copyright
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