Step by step, how do you make adjusting entries?
submitted by Kayla

Sarah

incase of stock adjustment it is to be debited to the trading account and shown on assets side of balancesheet. prepaids or received in advances must be deducted from concerned income or expenditure account and shown on balancesheet as the case may be asset or liability.outstandings must be added with income or expenditure account concerned and showed in balancesheet as the case may be.since the company follows separate entity concept, interst on capital is an expense and debited to profit&loss a/c,similarly interest on drawings is an income hence credited to the same. the first one is added on to capital while the latter one is deducted.

Dave

Determine Credit or debit, make entry to that account and or entry to the accounts receivable or payable.