Recording salaries expense for employees not yet paid. On July 3, a deposit in the amount of Rs. Mr. Green light, a commission agent has received $3,600 on July 1, 2016, as a commission from a client. Deferred revenue is the payment the company received for the goods or services that it has yet to deliver or perform. 11 Adjusting Entry Examples Continued, DEFERRALS Continued: Supplies: (Another example of a type of prepaid expense) On December 31, 2016, Auburn Company had $500 of supplies on hand. A business purchased office supplies in form of 10 reams of bond paper at ₱300 per ream, or a total amount of ₱3000 on September 1, 2016. An adjusting entry is made to recognize the revenue in the period in which it was earned. Example. Solution for Which of the following is an example of a deferral (or prepaid) adjusting entry? Required: What is the proper adjusting entry if Johnson could determine a) The amount of supplies remaining unused? Reversing Entry for Accrued Income. Question: Which Of The Following Is An Example Of A Deferral (or Prepaid) Adjusting Entry? Adjusting entries for depreciation, bad debts and other allowances are also never reversed. Adjusting entries for unearned revenue under the liability method and for prepaid expense under the asset method are never reversed. Which of the following is an example of a deferral (or prepaid) adjusting entry? Which of the following is an example of a deferral (or prepaid) adjusting entry? See the answer. For example, a company pays $4,500 for an insurance policy covering six months. Deferred revenue is sometimes called unearned revenue, deferred income, or unearned income. Deferred Expense vs. Prepaid Expense. Profit & Loss A/C DR 330000/-To Deferred Tax … d. Recording interest expense incurred on a notes payable not due until next year. The movement of -70 is accounted for as a reduction in the deferred tax liability with the following journal. It is the end of the first month and the company needs to record an adjusting entry to recognize the insurance used during the month. Office supplies 3,000 Adjusting entries are journal entries recorded at the end of an accounting period to adjust income and expense accounts so that they comply with the accrual concept of accounting. Solution (1). The only one entry will be passed in books for Rs. 15 lacs which arrived at 11.70 lacs current year. Because the journal entry above was made using a discounted valuation, the account balances will have to be adjusted upward each year to reflect the updated present value. c. Recording revenue that has been earned but not yet received. Show transcribed image text. This is the fourth step in the accounting cycle. View Answer On July 1, 2017, Oriole Co. pays $16,140 to Waterway Insurance Co. for a 3-year insurance policy. The following entries show the initial payment for the policy and the subsequent adjusting entry for one month of insurance usage. Last year Deferred Tax Assets were of Rs. Deferrals - revenues or expenses that have been recorded but need to be deferred to a later date. Deferred Tax Liability Journal Entry. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is a. debit Salaries Payable, $12,000; credit Cash, $12,000 b. debit Salary Expense, $12,000; credit Dividends, $12,000 When a company purchases supplies in bulk, it is recorded as an asset until the supplies are used. Search for: Recent Posts. Deferred revenue is an accrual account used to accurately report a company's balance sheet. One-third of the commission received is in respect of work to be done next year. Prior to recording adjusting entries. a. A prepaid expense often happens in the case of purchasing insurance coverage. Recording the usage of office supplies during the period. Example 3 – Asset / expense adjusting entry for supplies. On the Posting Preview page, choose the G/L Entry action, and then choose the Show Related Entries action. Expert Answer 100% (2 ratings) As you deliver goods or perform services, parts of the deferred revenue become earned revenue. Make necessary journal entries in the books of Green Light. By the end of the month, services in the amount of Rs. For example, if you buy a delivery truck for $36,000 with a three-year recover period, you create an adjusting entry every month consisting of a debit to depreciation expense and credit to accumulated depreciation of $1,000. Question: Question 47 Which Of The Following Is An Example Of A Deferral Adjusting Entry? While “deferred expenses” are sometimes also referred to as “prepaid expenses,” there is … Mr. Green light prepares financial statements on December 31 each year. 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