CHAPTER 3 Adjusting Accounts for Financial Statements Qs 321

CHAPTER 3 Adjusting Accounts for Financial Statements Qs 3-21 Recording prepaids and unearned amounts as expenses and revenues Lo9 0ir er Company initially records prepaid and unearned items in income statement accounts. Given Fos- Fost ter Company\'s practices, what is the appropriate adjusting entry for each of the following at November 30, 2017, the end of the company\'s first accounting period? a. There are unpaid salaries of $3,000. b. Unused office supplies of $800 were counted at year-end. There was no beginning balance in office supplies. e. Earned but unbilled consulting revenue of $2,300 was discovered. d. It was determined that there was unearned revenue of $4,200. Exercises

Solution

QS 3-21) adjusting entries: Date Accounts Titles Debit $ Credit $ 30-Nov-17 Salary expense 3000 Salary payable 3000 (being salary due but not paid booked) 30-Nov-17 Supplies expense (pur - 800) Supplies   (pur - 800) (being supplies expenses booked) 30-Nov-17 AR 2300 Sales revenue 2300 (being earned revenue booked) 30-Nov-17 Cash / Revenue 4200 Unearned revenue 4200 (being cash received for future services booked)