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Prepare Adjusting Entries for the Following Items on December 31

question 134

Essay

Prepare adjusting entries for the following items on December 31, the end of the fiscal year for Carson Carpets. The company initially records cash received in advance of performing the service as a liability, and prepaid expenses as current assets.
a)Amortization on equipment, $2,500
b)Services performed but unbilled, $3,500
c)Salaries owed to employees at year end, $2,500
d)Unearned service revenue earned, $5,500
e)Supplies used during the year, $3,200
f)Prepaid rent expired during the year, $7,500


Definitions:

Cross Elasticity

An indicator showing the sensitivity of the demand for one product in relation to the price alteration of another product, revealing whether they are substitutes or complementary goods.

Quantity Demanded

The overall quantity of a product or service that buyers are ready and capable of buying at a specific price.

Price Change

Refers to the variation in the cost of a good or service over time.

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed.

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