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Essay

Private Equity

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Issue:

Business

 

Written by:

Juan B

 

Date added:

February 9, 2012

 

Level:

University

 

Grade:

A

 

No of pages / words:

3 / 722

 

Was viewed:

593 times

 

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Essay content:

If there is, they use a reverse entry to recognize an asset and reduce the expense. Here is an example. Firm X paid $13,000 for rentals during 2006. As these payments are made, the firm records the following: Rental expense $13,000 Cash $13,000 At the end of the year, the firm examines to determine whether any portion of $13,000 is still not expired...
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If all $13,000 is expired, then there is no adjusting entry to make. If, on the other hand, the firm finds that $1,000 of the $13,000 is the payment for next January’s rental (i.e., $1,000 is not expired yet), then the firm records the following adjusting entry on 12/31/2006 (we call this adjusting entry reverse entry): Prepaid expenses $1,000 Rental expense $1,000 When these two entries are added together, we find that the firm’s rental expense during 2006 was $12,000 and there is a $1,000 prepaid expenses (an asset) at the end of 2006...
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