Identify what type of adjusting entry (prepaid expense, unearned revenue, accrue
ID: 2434835 • Letter: I
Question
Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, accrued revenue) is needed in each situation, at December 31, 2010.1. Emeril collects $1,000 from a customer in 2010 for services to be performed in 2011.
2. Emeril incurs utility expense which is not yet paid in cash or recorded.
3. Emeril's employees worked 3 days in 2010, but will not be paid until 2011.
4. Emeril earned service revenue but has not yet received cash or recorded the transaction.
5. Emeril paid $2,000 rent on December 1 for the 4 months starting December 1.
6. Emeril received cash for future services and recorded a liability until the revenue was earned.
7. Emeril performed consulting services for a client in December 2010. On December 31, it billed the client $1,200.
8. Emeril paid cash for an expense and recorded an asset until the item was used up.
9. Emeril purchased $900 of supplies in 2010; at year-end, $400 of supplies remain unused.
10. Emeril purchased equipment on January 1, 2010; the equipment will be used for 5 years.
11. Emeril borrowed $10,000 on October 1, 2010, signing an 8% one-year note payable.
Explanation / Answer
Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, accrued revenue) is needed in each situation, at December 31, 2010. 1. Emeril collects $1,000 from a customer in 2010 for services to be performed in 2011. – Unearned revenue. 2. Emeril incurs utility expense which is not yet paid in cash or recorded. – accrued expenses 3. Emeril's employees worked 3 days in 2010, but will not be paid until 2011. – accrued expenses. 4. Emeril earned service revenue but has not yet received cash or recorded the transaction. – Accured revenue. 5. Emeril paid $2,000 rent on December 1 for the 4 months starting December 1. – Prepaid expenses. 6. Emeril received cash for future services and recorded a liability until the revenue was earned. – unearned revenue. 7. Emeril performed consulting services for a client in December 2010. On December 31, it billed the client $1,200. – Accrued revenue. 8. Emeril paid cash for an expense and recorded an asset until the item was used up. – prepaid expenses. 9. Emeril purchased $900 of supplies in 2010; at year-end, $400 of supplies remain unused. – Accrued expenses. 10. Emeril purchased equipment on January 1, 2010; the equipment will be used for 5 years. – Accured expenses. 11. Emeril borrowed $10,000 on October 1, 2010, signing an 8% one-year note payable. – Accrued expense.
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