Duncan Services Initially Records Prepaid Expenses as Expenses, and Unearned

question 142

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.

---

Definitions:

Compound

Pertaining to a substance made up of two or more elements chemically combined in fixed proportions.

Atomic

Relating to atoms, the smallest constituent unit of ordinary matter that has the properties of a chemical element.

Symbolized Categorical Statement

A logical statement that uses symbols to represent categorical propositions, typically involving qualifiers such as all, some, or no.

Categorical

Pertaining to categories, absolutes, or conditions that are explicit and unconditional, often used in logic to describe propositions that are universally true or false.