(1) Calculate the maturity value of the note, using the stated interest rate. (2) Calculate the present value of the note at the selling date using the days. between the sell date and maturity date and the rate money is worth. Example: A 270-day note for $3000 with interest at 8.5% is dated February 2, 2010.
Purpose of Adjusting Entries. The main purpose of adjusting entries is to update the accounts to conform with the accrual concept. At the end of the accounting period, some income and expenses may have not been recorded, taken up or updated; hence, there is a need to update the accounts.
Step 5 of the accounting process involves the preparation of adjusting entries. Adjusting journal entries are made to update the accounts and bring them to their correct balances. The preparation of adjusting entries is an application of the accrual concept of accounting and the matching principle.