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.

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Definitions:

Reinforcer

Any stimulus which strengthens or increases the probability of a specific response or behavior.

Primary Reinforcers

Innate reinforcing qualities, such as food and water, that satisfy biological needs and do not require learning to become effective.

Radical Behaviorists

Proponents of a branch of psychology that emphasizes the study of observable behavior and the environmental factors that influence it, often minimizing or ignoring internal states like thoughts and feelings.

Internal States

Psychological and physiological conditions that exist within an individual, such as emotions, moods, desires, and health status.