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Chapter 3: Q3TI (page 140)

Startech Surveillance Services had the following adjustments as of the end of the year:

a. Equipment depreciation was \(1,500.

b. \)700 of advertising expense was incurred but not paid. (Use Advertising Payable.)

c. Office Supplies on hand at the end of the year totaled \(250. The beginning balance of Office Supplies was \)600.

d. \(1,200 of rent revenue was earned but not recorded or received.

e. Unearned revenue of \)3,000 had been earned.

6. For each situation, indicate which category of adjustment (deferral or accrual) is described.

7. Journalize the adjusting entry needed.

Short Answer

Expert verified

Equipment depreciation and office supplies are deferral and the rest are Accrual.

Step by step solution

01

Classification of adjustment type

Transaction

Adjustment type

a)

Deferred expense

b)

Accrued expense

c)

Deferred expense

d)

Accrued revenue

e)

Accrued revenue

02

Recording of journal entry

Date

Particular

Debit

Credit

a)

Depreciation expense – Equipment

$ 900

Accumulated depreciation - Equipment

$ 900

Being depreciation incurred

b)

Advertising Expense

700

Accrued Expense

700

Being office supplies used

c)

Supplies expense

350

Office Supplies

350

Being supplies expense incurred

d)

Accounts receivables

1,200

Net revenue

1,200

Being revenue earned but not received

e)

Unearned revenue

$3,000

Service revenue

$3,000

Being unearned revenue earned

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Most popular questions from this chapter

What is a fiscal year? Why might companies choose to use a fiscal year that is not a calendar year?

Question :Consider the following independent situations at December 31: a. On October 1, a business collected \(3,000 rent in advance, debiting Cash and crediting Unearned Revenue. The tenant was paying one year’s rent in advance. On December 31, the business must account for the amount of rent it has earned. b. Salaries expense is \)1,800 per day—Monday through Friday—and the business pays employees each Friday. This year, December 31 falls on a Thursday. c. The unadjusted balance of the Office Supplies account is \(3,000. Office supplies on hand total \)1,900. d. Equipment depreciation was \(500. e. On April 1, when the business prepaid \)4,320 for a two-year insurance policy, the business debited Prepaid Insurance and credited Cash. Journalize the adjusting entry needed on December 31 for each situation. Use the letters to label the journal entries

Question :Birch Park Senior Center has a weekly payroll of \(12,500. December 31 falls on Wednesday, and Birch Park Senior Center will pay its employees the following Monday (January 5) for the previous full week. Assume Birch Park Senior Center has a five-day workweek and has an unadjusted balance in Salaries Expense of \)620,000. Requirements 1. Record the adjusting entry for accrued salaries on December 31. 2. Post the adjusting entry to the accounts involved, and show their balances after adjustments. 3. Record the journal entry for payment of salaries made on January 5

What is an accrued expense? Provide an example.

What is a deferred revenue? Provide an example.
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