(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.
It then becomes the opening balance-the first entry in the new financial year. Opening balances can also become important if a firm transfers their accounts to a new accounting system. When this occurs, the last entry in the previous accounts will become the opening balance in the firm's new accounts.