FAR EASTERN UNIVERSITY

INSTITUTE OF ACCOUNTS, BUSINESS, and FINANCE

FAR 41

MATRIX - ADJUSTING ENTRIES

Transactions Original Entry ADJUSTING ENTRY
1. Prepayments Asset Method
Expenses already paid but not yet incurred/ Prepaid Expense xxx EXPENSE xxx
used or currently matched with earnings. Cash xxx PREPAID EXPENSE xxx

These are Assets. Note: The amount of the adjusting journal entry represents the expired or
used portion of the prepayment. “nagamit”
Expense Method – (alternative)
Expense xxx PREPAID EXPENSE
Cash Xxx EXPENSE xxx
xxx
Note: The amount of the adjusting journal entry represents the unexpired
or unused portion of the prepayment. “natira”
2. Unearned of Deferred Income Liability Method
Income already received but not yet earned Cash xxx UNEARNED INCOME xxx
or currently matched with earnings. Unearned Income xxx INCOME xxx

This is a Liability. Note: The amount of the adjusting journal entry is the earned portion of
the amount received. “kinita”
Income Method
Cash INCOME
Income xxx UNEARNED INCOME xxx
Xxx xxx
Note: The amount of the adjusting journal entry is the unearned portion of
the amount received. “di pa kinita”
3. Accrued Expenses
Expenses already incurred/used or currently NONE “rekta adjustment” EXPENSE xxx
matched with earnings, but not yet paid. PAYABLE xxx
4. Accrued Income
Income already earned or currently matched NONE “rekta adjustment” RECEIVABLE xxx
with expenses, but not yet received INCOME xxx
5. Bad Debts or Doubtful Accounts
Losses due to uncollectible accounts. BAD DEBTS EXPENSE xxx
ALLOWANCE FOR BAD DEBTS xxx
NONE “rekta adjustment”
Note: Allowance for Bad Debts is called a CONTRA-ASSET account as it
is a deduction (and presented in the balance sheet as such) from the
related asset (Accounts Receivable).
6. Depreciation Expense
The allocation of the plant asset cost (net of DEPRECIATION EXPENSE xxx
salvage value) over its estimated useful life. ACCUMULATED DEPRECIATION xxx
NONE “rekta adjustment”
This is the expense allotted for the wear and Note: Accumulated Depreciation is called a CONTRA-ASSET account as
tear of property, plant and equipment due to it is a deduction (and is presented in the balance sheet as such) from the
actual usage and passage of time. related asset (e.g. Building, machinery, equipment, etc.)