Adjusting The Journal in The Account in English

Adjusting the
Journal in the
Account
GRUP 4
1. Hisyam Razzaq Ferdiansyah 1411800087
2. Regiyanda Adji Kuswara 1411800089
ICP / Industrial Engineering / Cost Analysis Course / Subject 7 / Adjusting the Journal in the Account
ADJUSTMENT IS ?
– Adjudication / issuance is one of the processes in the
collection and presentation of financial statements
based on certain accounts adjusted through certain
procedures with the aim of ensuring that each
nominal account shows the income and expenses
intended for a certain period and to ensure that each
real account determines the number of assets and ask
for the actual one at the end of the period.
recording transactions
CASH ACCRUAL
BASE BASE
REPORT PERIODIZATION
– To find out how much profit is earned in a
period, it is necessary to make a
periodization of financial statements that
will contain important information about the
company's income and expenses
Revenue Principle
– The principle of income relates to problems
1) when income is recorded as a transaction, and
2) the amount of income recorded.
– Income is recorded when acquired or when it becomes

a company right (accrual basis)
The Principle of Matching Cost Againts Revenue
– This principle states that the income received must be compared with
the costs sacrificed to obtain income and expenses must occur in the
same period as the income received.
– Costs incurred by the company but have nothing to do directly or

indirectly with the income that will be obtained and occur in a
different period from the income cannot be included as a burden in the
period the income is obtained. This is done to get the actual amount of
profit generated
– Not all accounts must be adjusted, we can directly compile
financial statements from the trial balance if no account
needs to be adjusted.
– But if what happens is the opposite (there is an account

that must be adjusted) before adjusting and presenting the
financial statements, adjustments are needed first by
making an adjustment journal to produce the actual
amount of each nominal account and real account.
– The accounts that need to be adjusted include those
belonging to the following groups:
1. Prepaid expenses
2. Equipment
3. Depreciation of fixed assets
4. Prepaid income
5. Depreciation, amortization and depletion
6. Accrued expenses
7. Revenue that will still be received
1. prepaid expense
• Prepaid expenses are transactions that are considered as prices (assets) so they
become a burden. These costs are company assets that provide benefits for the
future.
Problems example:
For example on January 3, 2019 PT. Accorner Retailindo pays upfront fees of Rp.
60,000,000 for building rent for six months. The fund is actually a rental fee for
the company for six months, but when preparing interim financial statements per
month (for example), the costs recognized for the month are rent allocations paid
in advance for each month. For example, the company wants to prepare a
monthly financial report for the period ending January 31, 2019, the rental fee
recognized in January is only Rp. 10,000,000 (Rp. 60,000,000 / 6) while the
remainder is not recognized as a fee.
Based on the above case, the journals needed to record prepaid expenses
are as follows:
2019 information Debet Kredit
Jan 3 Prepaid expenses Rp 60.000.000
cash Rp 60.000.000
While the journals needed to record the adjustment of prepaid fees as of January 31,
2019 are as follows:
Jan 3 Building Rental Costs Rp 10.000.000
prepaid expenses Rp 10.000.000
The above journal will cause the building rental fee for
January to be Rp 10,000,000.00 and cause the balance of
prepaid expenses to decrease by Rp 10,000,000.00 so that
the total prepaid expenses recorded in the statement of
financial position are only Rp 50,000,000, 00
2. Equipment
• Equipment is goods used by companies for operational activities that are
used for one year. Equipment that has been used will be a burden at the
end of the accounting period
Problems example :
On January 5, 2019, Sallon Beautiful purchased a cash supply of 1,000,000. As of

January 31, 2019, the remaining equipment is 700,000, which means the equipment used
is 300,000. Adjusting journal to record it as follows:
Jan 31 Equipment load Rp 300.000
Equipment Rp 300.000
3. Depreciation of Fixed Assets
• Fixed assets are tangible assets (except land) that are ready to be used in
company operations and their economic life is more than one year. Examples of
fixed assets are equipment, vehicles, machinery, and buildings.
• Fixed assets will experience depreciation or reduced ability to provide economic

benefits gradually.
Problems example :
On January 3, 2019 in the trial balance there is a business equipment account of Rp.
6,500,000. Beautiful salon sets equipment depreciation at 10%. So the depreciation of
equipment is Rp. 650,000. Equipment adjustment journal as follows:
2019 Information Debet Kredit
Jan 3 Depreciation of equipment Rp 650.000
Accumulated
Rp 650.000
depreciation of equipment
4. PREPAID INCOME
Unearned income is income received at the beginning by the company for a
certain period of time. As with prepaid expenses, income received in advance
must be adjusted to show the actual income earned for a period. For this
reason, the amount of income received upfront will be allocated to each
period of income recognition.
Problems example :
On January 3, 2019 PT. Suma Berkah Jaya receives rental income of Rp

60,000,000.00 from PT. Accorner Retailindo for building rental for the next six
months. Rental income received by PT. Suma Berkah Jaya for building rent
for six months is income received in advance for PT. Suma Berkah Jaya.
The journals needed to record these transactions are as follows:
Jan 3 Cash Rp 60.000.000
Prepaid income Rp 60.000.000
Accounts of income received in advance have a normal credit
balance, which is recorded under capital in the statement of
financial position. When the company prepares interim financial
statements for the period ending January 31, 2019, the rental
income recognized for that period (January) is only 1/6 part of
the income received upfront (1/6 x Rp. 60,000,000.00).
Adjustments made to the rental income are recorded in the following journals:
Jan 31 Prepaid income Rp 10.000.000
Rental Income Rp 10.000.000
With the journal above, the balance of income received at the end of
the period in January and early February will automatically decrease
to Rp. 50,000,000. This is because a total of Rp 10,000,000 Received
Earning Revenue has been allocated to the Rent Revenue account.
And so on, adjustments to Unacceptable Income must continue to be
made for the next period until the balance reaches Rp. 0.
5. Depreciation, Amortization, Depletion
• Depreciation / depreciation is the process of allocating the cost of fixed assets

carried out systematically during the useful life of the fixed assets.
• The difference in depreciation with amortization and depletion lies in the object of
the allocated cost. If the acquisition cost allocated in depreciation is the
acquisition cost for fixed assets, the amortization and depletion allocated for each
is the acquisition cost for intangible assets and natural resources.
Problems example :
PT. Accorner Retailindo buys equipment in the amount of Rp. 6,000,000,000.00 on January 2, 2019.
Transactions are costs that must be charged by the company and must be compared with income to
determine the profit generated. However, should the total amount of IDR 6000,000,000.00 be
directly charged at the end of the period while on the other hand cancellation will not only benefit
the period? Of course not, if the useful life of the equipment is 5 years, the acquisition cost must be
allocated for each 5 year period. Thus, the acquisition cost of PT. Accorner Retailindo which must be
allocated every year is Rp. 1,200,000,000 (if using a straight-line method and no residual value of
equipment), this is a depreciation cost for one period that must be compared with the income
received which reflects the price / cost of benefits provided in that period. This value also reflects
the potential ability of equipment to decline along with the use of the company.
There are 4 (four) methods used to determine the amount of depreciation, namely:
1. Straightline method,
2. Double declining method,
3. Number of years,
4. Production unit.
Based on the example above, the journal entries that must be recorded for the
transaction are as follows.
2019 Informasi Debet Kredit
Jan 2 Equipment Rp 6.000.000.000
cash Rp 6.000.000.000
The company is assumed to use the straight-line method in calculating depreciation of
equipment and is considered to have no residual value from the equipment. So, on January 31,
2019 the depreciation of company equipment is Rp 100,000,000, along with the calculation.
Cost = Rp. 6,000,000,000
Equipment useful life = 5 years
Depreciation per year = Period of Earnings / Benefits
= Rp. 6,000,000,000 / 5
= Rp. 1,200,000,000
Depreciation Per Month = Depreciation Per Know / 12
= Rp. 1,200,000,000 / 12
= Rp 100,000,000
Journals needed to record the depreciation expense above are as follows.
Jan 31 Depreciation costs Rp 100.000.000
Accumulated Depreciation of
Rp 100.000.000
Equipment
6. ACCURED EXPENSE
• Accrued costs are costs that have been recognized as liabilities, but cash
disbursements for payment of these fees are deferred or carried out later
(not together with the recognition of costs).
• Examples of accrued costs are employee salaries for a month paid at the
beginning of the following month.
Suppose the salary for 500 employees in the example above is Rp. 1,600,000,000,
when the company wants to compile an interim financial report that ends on
January 31, 20X9, the required journals are as follows:
Jan 31 Employee Salary Fee Rp 1.600.000.000
Salary debt Rp 1.600.000.000
Because there has not been a cash outlay for the payment of the salary, the account credited is
Salary Payable (the company is assumed to have a debt in the form of a salary that must be paid to
the employee). On the 1st of February, when the salary is paid, then the journal that must be made
for the salary payment is as follows :
Feb 1 Salary debt Rp 1.600.000.000
cash Rp 1.600.000.000
With the journal above, Debt Salary will balance IDR 0 and cash will be reduced by the salary paid.
7. Revenue That Will Still Be Received
Generally companies also have income that will still be received in the
future. If accrued costs from the company must recognize these costs even
though there is no cash expenditure, then the income that will still be
received by the company must recognize income even though cash receipts
have not yet occurred (assuming accruals). This is because income has
substantially become the company's right for a period even though new cash
will be received in the next period.
Examples of income that will still be received are trade accounts receivable. For
example, on April 30, 20X9 companies made credit sales to customers totaling Rp
2,000,000,000, journals that needed to record transaction adjustments were as
follows:
Apr 30 Accounts receivable Rp 3.000.000.000
Income Rp 3.000.000.000
Transactions are income for the company but cash receipts for
transactions will only be received in the future in accordance with the
agreement made by both parties (the payment period is usually stated
in the sales invoice). Based on the journal above, income has become
the company's right for that period so it must be recognized and
recorded in the books. If the transaction is not adjusted and recorded,
the Accounts Receivable and Income accounts will produce
underserved balances for that period.
ICP/Industrial Engineering / Cost Analysis Courses / Subject 7 / Adjusting the Journal in the Account
EXERCISE
Data for adjustments as of December 31, 2017 at the Nusantra Light Trading Company are as follows:
1. The balance of the equipment account in the trial balance amounts to Rp.1,000,000 at the debit position. At
the end of the period, the amount of equipment remaining is Rp.400,000
2. The company still has a note receivable that must be received in the amount of Rp.150,000
3. The value of the rental balance received in advance shows the amount of Rp.18,000,000 in the credit
position. Timed rent from 1 April 2017 to 1 April 2018.
4. Employees' wages and salary that have not been paid in December 2017 amount to Rp.2,400,000
5. The value of the insurance balance is prepaid on the slado balance sheet in the amount of Rp.2,400,000 at
the debit position. Insurance is used to pay from May 1, 2017 to May 1, 2018.
6. The use of shop equipment causes a decrease of Rp.4,000,000 in store equipment
7. 5% of the value of the accounts receivable amounting to Rp.50,000,000 is estimated not to be collected, this is
because the creditor company is bankrupt.
8. The value of inventory of merchandise recorded at the beginning of the period is IDR 15,000,000.
merchandise inventory at the end of the remaining period in warehouse is IDR 20,000,000.

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Adjusting the

1. Hisyam Razzaq Ferdiansyah 1411800087

2. Regiyanda Adji Kuswara 1411800089

1) when income is recorded as a transaction, and

2) the amount of income recorded.

– Income is recorded when acquired or when it becomes

– Costs incurred by the company but have nothing to do directly or

– But if what happens is the opposite (there is an account

2019 information Debet Kredit

Jan 3 Prepaid expenses Rp 60.000.000

2019 information Debet Kredit

Jan 3 Building Rental Costs Rp 10.000.000

prepaid expenses Rp 10.000.000

On January 5, 2019, Sallon Beautiful purchased a cash supply of 1,000,000. As of

2019 information Debet Kredit

Jan 31 Equipment load Rp 300.000

• Fixed assets will experience depreciation or reduced ability to provide economic

2019 Information Debet Kredit

Jan 3 Depreciation of equipment Rp 650.000

On January 3, 2019 PT. Suma Berkah Jaya receives rental income of Rp

2019 Information Debet Kredit

Jan 3 Cash Rp 60.000.000

Prepaid income Rp 60.000.000

2019 information Debet Kredit

Jan 31 Prepaid income Rp 10.000.000

Rental Income Rp 10.000.000

• Depreciation / depreciation is the process of allocating the cost of fixed assets

2. Double declining method,

2019 Informasi Debet Kredit

Jan 2 Equipment Rp 6.000.000.000

Cost = Rp. 6,000,000,000

Equipment useful life = 5 years

Depreciation per year = Period of Earnings / Benefits

Depreciation Per Month = Depreciation Per Know / 12

2019 Information Debet Kredit

Jan 31 Depreciation costs Rp 100.000.000

2019 Information Debet Kredit

Jan 31 Employee Salary Fee Rp 1.600.000.000

Salary debt Rp 1.600.000.000

2019 Information Debet Kredit

Feb 1 Salary debt Rp 1.600.000.000

2019 Information Debet Kredit

Apr 30 Accounts receivable Rp 3.000.000.000

6. The use of shop equipment causes a decrease of Rp.4,000,000 in store equipment

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