Question

Accounting: Identifying adjusting entries with explanations?
For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.)

A. To record receipt of unearned revenue
B. To record this periods earning of prior unearned revenue
C. To record payment of an accrued expense
D. To record receipt of an accrued revenue
E. To record an accrued expense
F. To record an accrued revenue
G. To record this periods use of a prepaid expense
H. To record payment of a prepaid expense
I. To record this periods depreciation expense


1. Rent Expense Dr: $2,000
Prepaid Rent Cr. $2,000

2. Interest Expense Dr. $1,000
Interest Payable Cr. $1,000

3. Depreciation Expense Dr. $4,000
Accumulated Depreciation Cr. $4,000

4. Unearned Professional Fees Dr. $3,000
Professional Fees Earned Cr. $3,000

5. Insurance Expense Dr. $4,200
Prepaid Insurance Cr. $4,200

6. Salaries Payable Dr. $1,400
Cash Cr. $1,400

7. Prepaid Rent Dr. $4,500
Cash Cr. $4,500

8. Salaries Expense Dr. $6,000
Salaries Payable Cr. $6,000

9. Interest Receivable Dr. $5,000
Interest Revenue Cr. $5,000

10. Cash Dr. $9,000
Accounts Receivable (from consulting) Cr. $9,000

11. Cash Dr. $7,500
Unearned Professional Fees Cr. $7,500

12. Cash Dr. $2,000
Interest Receivable Cr. $2,000

Answer 1

Answer:

1.. Rent Expense Dr: $2,000

Prepaid Rent Cr. $2,000

G

2. Interest Expense Dr. $1,000

Interest Payable Cr. $1,000

E

3. Depreciation Expense Dr. $4,000

Accumulated Depreciation Cr. $4,000

I

4. Unearned Professional Fees Dr. $3,000

Professional Fees Earned Cr. $3,000

B

5. Insurance Expense Dr. $4,200

Prepaid Insurance Cr. $4,200

G

6. Salaries Payable Dr. $1,400

Cash Cr. $1,400

C

7. Prepaid Rent Dr. $4,500

Cash Cr. $4,500

H

8. Salaries Expense Dr. $6,000

Salaries Payable Cr. $6,000

E

9. Interest Receivable Dr. $5,000

Interest Revenue Cr. $5,000

F

10. Cash Dr. $9,000

Accounts Receivable (from consulting) Cr. $9,000

D

11. Cash Dr. $7,500

Unearned Professional Fees Cr. $7,500

A

12. Cash Dr. $2,000

Interest Receivable Cr. $2,000

D

Explanation:

When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are

Debit Cash account and Credit Unearned fees or deferred revenue.

As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.

When revenue is earned but cash is yet to be received,

Debit Accounts receivable

Credit Revenue account

When cash is received,

Debit Cash account  

Credit Accounts receivable.

When insurance is paid in advance, the entries required are  

Debit Prepaid Insurance

Credit Cash account

As time elapses and the insurance expires,

Debit Insurance expense

To record depreciation of an asset, Debit depreciation expense account , credit Accumulated depreciation expense account.