Patterson Company was founded in 2013 and engaged in the following transactions:
1. issued common stock for cash
2. purchased supplies on account
3. collected cash from a customer for services to be provided over a period of 1 year
4. paid a cash dividend to stockholders
5. purchased a 2-year fire insurance policy
6. provided services to customers on account
7. collected cash from accounts receivable
8. paid cash for various operating expenses
9. paid rent in advance for 3 months at a time
Required:
a) Which of the above transactions would require adjusting entries at year end?
b) Why are adjusting entries required before financial statements can be prepared.

Question

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The Answer of Patterson Company was founded in 2013 and engaged in the following transactions:
1. issued common stock for cash
2. purchased supplies on account
3. collected cash from a customer for services to be provided over a period of 1 year
4. paid a cash dividend to stockholders
5. purchased a 2-year fire insurance policy
6. provided services to customers on account
7. collected cash from accounts receivable
8. paid cash for various operating expenses
9. paid rent in advance for 3 months at a time
Required:
a) Which of the above transactions would require adjusting entries at year end?
b) Why are adjusting entries required before financial statements can be prepared.

Patterson Company Was Founded in 2013 and Engaged in the Following