Duncan Services Initially Records Prepaid Expenses as Expenses,and Unearned Revenues $$\begin{array} { | l | r | r | } \hline \quad\quad\quad&\quad&\quad \\\hline \\\hline\end{array}$$

question 75

Essay

Duncan Services initially records prepaid expenses as expenses,and unearned revenues as revenues.Then at the end of the year,they make the necessary adjustments to accrual basis.On December 15,Duncan collected revenues of $1,000 in advance from a new client,and agreed to provide services to the client for the period of December 15 through January 15 of the following year.Please provide the adjusting entry that would be needed at year-end.
$$\begin{array} { | l | r | r | } \hline \quad\quad\quad&\quad&\quad \\\hline \\\hline\end{array}$$

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Definitions:

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Negotiable

Able to be transferred or endorsed to another party in exchange for money or as part of a contractual agreement.

Medium of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods and services between parties.

Negotiable

Capable of being discussed in order to reach an agreement or capable of being transferred by endorsement or delivery.