Adjusting Entry

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Adjusting Entry

1. An adjustment made to a company's financial records at the end of an accounting period to assign revenues and expenses to the days on which the events justifying them occurred or on which the revenue was received, depending on the situation. For example, if a company is paid in advance for the purchase of some good, an adjusting entry may recognize that revenue on the day the good was delivered. Likewise, if the company was paid after delivery, it may recognize the revenue on the day it was paid. See also: Accrued Expenses, Accrued Revenue, Prepaid Expenses, Unearned Revenue.

2. Any correction to a previous entry in a company's financial records.
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In this case, where the overstatement may range from $800,000 to $1,600,000, an adjusting journal entry would be likely.
They record the following adjusting journal entry so that the balance sheet reports the adjusted value for the breeding livestock.
The required form of the adjusting journal entry is to decrease (debit) the Deferred Tax Liability account by $37,000 and to decrease (credit) the Other Comprehensive Income account by the same amount.