Duncan Services Records Prepaid Expenses as Expenses When Incurred, and Unearned

question 61

Essay

Duncan Services records prepaid expenses as expenses when incurred, and unearned revenues as revenues when the payment is received in advance. At the end of the year, Duncan makes the necessary adjustments based on accrual basis accounting. On July 1, Duncan paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year. Provide the year-end adjusting entry for rent prepayment.

---

Definitions:

Human Skills

The ability to work well with others, often considered essential for effective leadership and team collaboration.

Problem-solving Skills

The ability to engage in a process to define a problem, generate solutions, evaluate alternatives, and decide on a course of action.

Schedule A

A form used in the U.S. to itemize deductions on an individual's federal tax return.

AGI Limitation

Refers to the limits placed on certain tax benefits or deductions that are based on the taxpayer's Adjusted Gross Income (AGI), restricting eligibility or the extent of benefits based on AGI.