[confused10191]

Duncan Company records all prepayments in income statement accounts. At April 30, the trial balance shows Supplies Expense $3,207, Service Revenue $9,913, and zero balances in related balance sheet accounts. Prepare the adjusting entries at April 30 assuming
(a) $1,624 of supplies on hand and (b) $2,962 of service revenue should be reported as unearned.

Date Account/Description Debit Credit
(a) Apr. 30

(b) Apr. 30




My answer was
(a) supplies expense 1,583
Prepaid supplies 1,583

(b) unearned service revenue 8,289
Service revenue 8,289

[pready]

A. Your Debit should be to Supplies and your Credit should be to Supplies Expense for 1,624.

B. Your Debit should be to Service Revenue and your Credit should be to Unearned Service Revenue for 2,962.

The reason is that the company "records all prepayments in the Income Statement Accounts", which means you have to move the amounts given out of your Income Statement Accounts into your Balance Sheet Accounts.