Question

Startech Surveillance Services had the following adjustments as of the end of the year:

a. Equipment depreciation was \(1,500.

b. \)700 of advertising expense was incurred but not paid. (Use Advertising Payable.)

c. Office Supplies on hand at the end of the year totaled \(250. The beginning balance of Office Supplies was \)600.

d. \(1,200 of rent revenue was earned but not recorded or received.

e. Unearned revenue of \)3,000 had been earned.

6. For each situation, indicate which category of adjustment (deferral or accrual) is described.

7. Journalize the adjusting entry needed.

Short answer

Equipment depreciation and office supplies are deferral and the rest are Accrual.

Step-by-step solution

Classification of adjustment type

Transaction	Adjustment type
a)	Deferred expense
b)	Accrued expense
c)	Deferred expense
d)	Accrued revenue
e)	Accrued revenue

Recording of journal entry

Date	Particular	Debit	Credit
a)	Depreciation expense – Equipment	$ 900
	Accumulated depreciation - Equipment		$ 900
	Being depreciation incurred
b)	Advertising Expense	700
	Accrued Expense		700
	Being office supplies used
c)	Supplies expense	350
	Office Supplies		350
	Being supplies expense incurred
d)	Accounts receivables	1,200
	Net revenue		1,200
	Being revenue earned but not received
e)	Unearned revenue	$3,000
	Service revenue		$3,000
	Being unearned revenue earned