(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.
Patterns in Adjusting Entries. Adjusting entries follow the same debit/credit form used for recording transactions during the year. The entries themselves are first recorded in a general journal and then posted to the appropriate general ledger account. Unlike other recorded transactions, these adjusting entries are also posted on the trial balance.