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Adjusting Entries Examples: Five Worked Journal Entries

Every adjusting entry is one of five types: accrued revenue, accrued expense, unearned (deferred) revenue, prepaid expense, or depreciation. Below is one fully worked journal entry for each type, with realistic numbers and the reasoning behind every debit and credit. If you want the concept itself — what adjusting entries are and why accrual accounting requires them — start with our adjusting entries guide; this page is for matching your homework problem to a worked entry.

Each example follows the same routine. Read the scenario, decide which of the five types it is, then check the entry against yours. Every entry below is dated the last day of the accounting period, because that is when adjusting entries are recorded — after the period's transactions are journalized but before the financial statements are prepared.

Five worked examples

Accrued revenue

Marlow Design finished a $4,725 branding project on June 27 but will not invoice the client until July 3. The work was completed in June, so June's books must show the revenue even though no bill has gone out.

Accrued revenue — adjusting entry at June 30

Account	Debit	Credit
Accounts Receivable	$4,725
Service Revenue		$4,725

Revenue is recognized when it is earned, not when it is billed or collected. The debit records the asset — the client owes $4,725 — and the credit places the revenue in June, the period the work happened. When cash arrives in July, that entry will debit Cash and credit Accounts Receivable; revenue is never recorded twice.

Accrued expense

On June 1 a bakery borrowed $18,500 at 6% annual interest, with no payment due until September 1. By June 30 one month of interest has accumulated: $18,500 × 6% ÷ 12 = $92.50. The expense exists even though no cash has left the business.

Accrued expense — adjusting entry at June 30

Account	Debit	Credit
Interest Expense	$92.50
Interest Payable		$92.50

The bakery used borrowed money for all of June, so June bears one month of interest cost. The debit puts the expense in the period it was incurred; the credit records the liability that will sit on the balance sheet until the September payment. Accrued salaries, utilities, and taxes all follow this exact shape: debit an expense, credit a payable.

Unearned (deferred) revenue

A gym collected $1,296 cash on March 1 for a twelve-month membership and credited the full amount to Unearned Revenue, a liability. By March 31 it has delivered one month of the membership: $1,296 ÷ 12 = $108 is now earned.

Unearned revenue — adjusting entry at March 31

Account	Debit	Credit
Unearned Revenue	$108
Membership Revenue		$108

The liability shrinks as the gym works it off. The debit removes one month's worth of the obligation; the credit recognizes that month as revenue. After this entry, Unearned Revenue holds $1,188 — the eleven months of service the gym still owes.

Prepaid expense

On April 1 a landscaping company paid $5,340 for a twelve-month insurance policy and debited Prepaid Insurance, an asset. One month of coverage has expired by April 30: $5,340 ÷ 12 = $445.

Prepaid expense — adjusting entry at April 30

Account	Debit	Credit
Insurance Expense	$445
Prepaid Insurance		$445

The asset was bought when the policy was paid for; the expense happens as the coverage is used up. The debit records April's share of the cost, and the credit reduces Prepaid Insurance to $4,895 — the eleven months of protection still unused. Prepaid rent and supplies work the same way: expense the used portion, keep the rest as an asset.

Depreciation

A print shop bought a wide-format printer on January 1 for $9,840, expecting a $600 salvage value after a four-year life. Straight-line depreciation is ($9,840 − $600) ÷ 48 months = $192.50 per month.

Depreciation — adjusting entry at January 31

Account	Debit	Credit
Depreciation Expense	$192.50
Accumulated Depreciation — Equipment		$192.50

Each month of use consumes part of the printer's cost, so each month gets a slice of expense. The credit goes to Accumulated Depreciation, a contra-asset, rather than to the Equipment account itself — the balance sheet keeps showing the $9,840 original cost with accumulated depreciation subtracted beneath it. Book value after this entry: $9,840 − $192.50 = $9,647.50.

The pattern behind all five

Line the five entries up and one rule appears: every adjusting entry pairs exactly one income-statement account (a revenue or an expense) with exactly one balance-sheet account (an asset, a liability, or a contra-asset). Cash never appears.

Accrued revenue — debit an asset (Accounts Receivable), credit a revenue
Accrued expense — debit an expense, credit a liability (a payable)
Unearned revenue — debit a liability (Unearned Revenue), credit a revenue
Prepaid expense — debit an expense, credit an asset (the prepaid account)
Depreciation — debit an expense, credit a contra-asset (Accumulated Depreciation)

Cash stays out because the cash either moved in an earlier period (prepaids, unearned revenue, the printer purchase) or will move in a later one (accruals). The adjusting entry's whole job is to fix timing — to put the revenue or expense in the period it belongs, regardless of when the money changed hands.

This gives you a fast check for any homework problem. First, find the mismatch between when cash moves and when the work or usage happens; that tells you which of the five types you have. Second, write the income-statement side — is this period earning revenue or incurring an expense? Third, let the balance-sheet side follow from the type. If your answer debits or credits Cash, it is not an adjusting entry, and you have likely journalized the original transaction instead.

Every adjusting entry pairs one income-statement account with one balance-sheet account, and Cash never appears. Identify which of the five types the scenario is — accrued revenue, accrued expense, unearned revenue, prepaid expense, or depreciation — and the debit and credit follow from the pattern.

Frequently asked questions

What is a trial balance prepared after adjusting entries are posted called?

The adjusted trial balance. It lists every account with its balance after adjustments and proves total debits still equal total credits. It is the direct source for the income statement and balance sheet, which is why adjusting entries must be posted before the statements are prepared.

How can I tell whether an entry is not an adjusting entry?

Look for Cash. Adjusting entries never debit or credit Cash, so on a multiple-choice question, any option involving Cash — collecting a receivable, paying a bill, buying equipment — is a regular transaction entry, not an adjusting entry.

Where does the information to journalize adjusting entries come from?

From the unadjusted trial balance plus internal records: loan agreements for interest rates, insurance policies for coverage periods, payroll records for unpaid wages, customer contracts for unearned amounts, and depreciation schedules for asset costs and lives. No document arrives from an outside party — that is exactly why these entries are easy to miss and must be made deliberately at period-end.

Why are adjusting entries journalized at the end of the period?

Accrual accounting records revenue when it is earned and expenses when they are incurred, but cash rarely moves at those exact moments. Adjusting entries close that timing gap at period-end so the income statement reports the period's true profit and the balance sheet reports accurate assets and liabilities.

How many adjusting entries does a company make each period?

As many as its accounts require — one for each prepaid balance being used up, each accrued revenue or expense, each unearned balance being earned, and each depreciable asset. There is no fixed number. Homework problems typically ask for five to ten; a real company may record dozens.

By the FinanceBrain Team · Last verified July 10, 2026 · How we produce and verify articles