(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.
Accounting for Assets. A business makes a debit entry or a credit entry to an account in its accounting journal to change its balance. Debits and credits can either increase or decrease an account, depending on the type of account. A debit entry increases an asset account, while a credit entry decreases an asset account. For example, if you credit the inventory account in your small businessâs records by $5,000, the account would decrease by $5,000.