Question: Assume this week is the end of 2018. It has been a wonderful year-end for you because your business Computer Servicing and Networking Business was doing great! But don't forget that you need to complete adjusting entities on Dec 31, 2018. Please give me one each example of two types of adjusting entries:
1. Deferred accounts
2. Accrued accounts
Please feel free to read the text books, but make sure you use transactions of your own company. For example:
1. Deferred expenses- Unearned Revenue
Scenario: I own a catering service. On Dec 16, 2018 one of my clients came to my office and asked me to provide the catering service on his birthday party for the next 30 days. He knew I would be very busy then, so he paid me $1,000 in advance. Deal! Here I need to record an entry on Dec 16 and adjust it on Dec 31. (Only entries, no ledgers needed)
Date Accounts and Explanation Debit Credit Dec. 16 Cash 1,000 Unearned Revenue 1,000 Collected cash for future services
Date Accounts and Explanation Debit Credit Dec. 31 Unearned Revenue 500 Service Revenue 500 To record service revenue earned that was collected in advance.