Affleck Company accumulates the following adjustment data at December 31. Instru

Question

Affleck Company accumulates the following adjustment data at December 31.

Instructions

For each of the items indicate the following.
(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
(b) The status of accounts before adjustment (overstatement or understatement).


Services provided but not recorded total $750.
Store supplies of $300 have been used.
Utility expenses of $225 are unpaid.
Unearned revenue of $260 has been earned.
Salaries of $900 are unpaid.
Prepaid insurance totaling $350 has expired.
(a) (b)
Item Type of Adjustment Accounts before Adjustment
1. Accrued ExpensesPrepaid ExpensesAccrued RevenuesUnearned Revenues Liabilities Overstated, Expenses UnderstatedAssets Overstated, Revenues OverstatedLiabilities Understated, Revenues UnderstatedAssets Understated, Revenues UnderstatedLiabilities Overstated, Expenses OverstatedAssets Overstated, Expenses OverstatedLiabilities Understated, Expenses OverstatedAssets Understated, Expenses OverstatedLiabilities Overstated, Revenues OverstatedLiabilities Understated, Revenues OverstatedAssets Overstated, Expenses UnderstatedLiabilities Understated, Expenses UnderstatedLiabilities Overstated, Revenues UnderstatedAssets Understated, Revenues OverstatedAssets Overstated, Revenues UnderstatedAssets Understated, Expenses Understated
2. Accrued RevenuesPrepaid ExpensesUnearned RevenuesAccrued Expenses Liabilities Understated, Expenses UnderstatedAssets Overstated, Revenues UnderstatedLiabilities Overstated, Revenues OverstatedLiabilities Overstated, Expenses UnderstatedAssets Understated, Expenses UnderstatedLiabilities Understated, Revenues OverstatedLiabilities Understated, Revenues UnderstatedLiabilities Overstated, Expenses OverstatedAssets Overstated, Expenses OverstatedLiabilities Overstated, Revenues UnderstatedAssets Overstated, Revenues OverstatedAssets Overstated, Expenses UnderstatedAssets Understated, Revenues OverstatedAssets Understated, Expenses OverstatedLiabilities Understated, Expenses Overstated
3. Unearned RevenuesPrepaid ExpensesAccrued RevenuesAccrued Expenses Liabilities Overstated, Revenues OverstatedAssets Overstated, Revenues OverstatedAssets Overstated, Expenses UnderstatedLiabilities Overstated, Expenses UnderstatedLiabilities Understated, Revenues UnderstatedAssets Understated, Expenses OverstatedLiabilities Overstated, Expenses OverstatedAssets Understated, Expenses UnderstatedLiabilities Understated, Revenues OverstatedAssets Understated, Revenues OverstatedAssets Overstated, Expenses OverstatedLiabilities Understated, Expenses OverstatedLiabilities Understated, Expenses UnderstatedLiabilities Overstated, Revenues UnderstatedAssets Overstated, Revenues Understated
4. Accrued RevenuesAccrued ExpensesUnearned RevenuesPrepaid Expenses Liabilities Overstated, Revenues OverstatedAssets Overstated, Revenues UnderstatedLiabilities Understated, Expenses UnderstatedLiabilities Overstated, Expenses UnderstatedLiabilities Understated, Expenses OverstatedLiabilities Understated, Revenues UnderstatedLiabilities Overstated, Revenues UnderstatedAssets Overstated, Expenses UnderstatedAssets Overstated, Revenues OverstatedAssets Understated, Revenues OverstatedAssets Understated, Expenses UnderstatedAssets Understated, Expenses OverstatedAssets Overstated, Expenses OverstatedLiabilities Overstated, Expenses OverstatedLiabilities Understated, Revenues Overstated
5. Accrued ExpensesUnearned RevenuesAccrued RevenuesPrepaid Expenses Assets Overstated, Revenues OverstatedAssets Understated, Expenses UnderstatedAssets Understated, Expenses OverstatedAssets Overstated, Expenses UnderstatedLiabilities Overstated, Expenses OverstatedLiabilities Overstated, Revenues UnderstatedLiabilities Overstated, Revenues OverstatedLiabilities Understated, Revenues OverstatedLiabilities Understated, Expenses UnderstatedAssets Overstated, Expenses OverstatedAssets Understated, Revenues OverstatedLiabilities Understated, Expenses OverstatedLiabilities Overstated, Expenses UnderstatedAssets Overstated, Revenues UnderstatedLiabilities Understated, Revenues Understated
6. Accrued ExpensesUnearned RevenuesAccrued RevenuesPrepaid Expenses Liabilities Overstated, Revenues UnderstatedLiabilities Overstated, Expenses UnderstatedLiabilities Overstated, Expenses OverstatedLiabilities Understated, Revenues OverstatedAssets Overstated, Expenses UnderstatedAssets Overstated, Revenues OverstatedLiabilities Overstated, Revenues OverstatedLiabilities Understated, Revenues UnderstatedAssets Understated, Expenses OverstatedLiabilities Understated, Expenses UnderstatedAssets Understated, Revenues OverstatedAssets Understated, Expenses UnderstatedAssets Overstated, Expenses OverstatedLiabilities Understated, Expenses OverstatedAssets Overstated, Revenues Understated


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Explanation / Answer

1. Services provided but not recorded total $750.
Accrued Revenue, Revenue understated, Accounts Receivable understated
2. Store supplies of $300 have been used.
Prepaid Expense, Store Supplies overstated, Store Supplies Expense understated
3. Utility expenses of $225 are unpaid.
Accrued Expenses, Utility Expense understated, Accounts Payable understated
4. Unearned revenue of $260 has been earned.
Unearned Revenue, Revenues understated, Unearned Revenues (liability) overstated
5. Salaries of $900 are unpaid.
Accrued Expense, Salaries Expense is understated, Salaries Payable (liability) understated. 
6. Prepaid insurance totaling $350 has expired.

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