Accrued Revenue
The asset account showing revenue earned but not yet received
Accounts Receivable
This liability account shows utilities expenses incurred but not yet paid
Utilities Payable
Another name for Deferred Revenue
Unearned Revenue
Another name for Deferred Expense
Prepaid Expense
The amount of supplies used when beginning supplies was $200. During the month, an additional $400 was purchased. Ending supplies are $100
$500
The journal entry recording $1,200 of services performed but not yet billed
Dr Accounts Receivable 1,200
Cr Service Revenue 1,200
The entry to record $300 of interest incurred on a loan, but not yet paid
Debit Interest Expense $300
Credit Interest Payable $300
The adjusting entry for $1,000 of unearned revenue that has now been earned
Debit: Unearned Revenue $1,000 Credit: Service Revenue $1,000
The entry to record one month of rent expense where Prepaid rent of $6,000 covers 6 months
Dr Rent Expense 1,000
Cr Prepaid Rent 1,000
Record $800 of depreciation
Dr Depreciation Expense 800
Cr Accumulated Depreciation 800
The journal entry to record $500 Interest revenue earned but not yet received
Dr Interest Receivable 500
Cr Interest Revenue 500
Expenses are listed on this financial statement
Income Statement
The journal entry to record the receipt of $1,200 in advance for services to be provided evenly over 12 months
Dr Cash 1,200
Cr Unearned Revenue 1,200
The entry to record 4 months of a prepaid 12-month software license costing $2,400
Debit: Software Expense $800 Credit: Prepaid Software $800
The adjusting entry when the supplies account showed $1,500. A count shows $400 remaining
Dr Supplies Expense 1,100
Cr Supplies 1,100
The entry to record a November client payment of $8,000 billed in September
Debit: Cash $8,000 Credit: Accounts Receivable $8,000
An adjusting entry for $4,000 of salaries earned by employees at year-end that will be paid next month
Debit: Salaries Expense $4,000 Credit: Salaries Payable $4,000
The adjusting entry at the end of the month when $100 of a $1,200 advance payment has been earned
Dr Unearned Revenue 100
Cr Service Revenue 100
The entry for Prepaid insurance of $2,400 for 12 months after 3 months expired
Dr Insurance Expense 600
Cr Prepaid Insurance 600
The reason adjusting entries are necessary
To ensure revenues and expenses are recorded in the proper time period
The status of net income without recording adjusting entries
overstated or understated
Adjusting for accrued expenses will increase these two types of accounts
Liability and Expense
The first month entry to record revenue when a company received $18,000 in advance for consulting services to be performed each of the next 6 months
Debit: Unearned Revenue $3,000 Credit: Service Revenue $3,000
The reason the adjusting entry for prepaid expenses decrease the asset account
Because part of the asset has been used and is no longer a future benefit.
The benefit of crediting accumulated depreciation instead of equipment
To preserve historical cost