Question

exercise 3-4 (algo) classifying adjusting entries lo p1, p2, p3, p4
for journal entries 1 through 10, identify the explanation that mostly closely describes it.
explanation journal entries debit credit
insurance expense 3,180
prepaid insurance 3,180
interest receivable 3,300
interest revenue 3,300
interest expense 2,208
interest payable 2,208
earned revenue 19,250
services revenue 19,250
unearned revenue 4,200
accounts payable 1,700
cash 1,700
cash 12,300
accounts receivable (from services) 12,300
prepaid rent 500
cash 500
depreciation expense 38,217
accumulated depreciation 38,217
salaries expense 13,280
salaries payable 13,280
c. to record this periods use of a prepaid expense.
d. to record accrued interest revenue.
e. to record accrued interest expense.
f. to record the earning of previously unearned income.

Explanation:

1. Insurance Expense and Prepaid Insurance: Debiting Insurance Expense and crediting Prepaid Insurance is to record this period's use of a prepaid expense (C). Prepaid insurance is an asset initially, and as time passes, the portion used becomes an expense.
2. Interest Receivable and Interest Revenue: Debiting Interest Receivable and crediting Interest Revenue is to record accrued interest revenue (D). Interest that has been earned but not yet received is accrued.
3. Interest Expense and Interest Payable: Debiting Interest Expense and crediting Interest Payable is to record accrued interest expense (E). Interest that has been incurred but not yet paid is accrued.
4. Unearned Revenue and Services Revenue: Debiting Unearned Revenue and crediting Services Revenue is to record the earning of previously unearned income (F). Unearned revenue is a liability initially, and as services are provided, it becomes revenue.
5. Accounts Payable and Cash: Debiting Accounts Payable and crediting Cash is a payment of a liability. There is no adjusting - entry explanation from the given list that exactly matches this common payment transaction.
6. Cash and Accounts Receivable (from services): Debiting Cash and crediting Accounts Receivable is a collection of an accounts receivable. There is no adjusting - entry explanation from the given list that exactly matches this common collection transaction.
7. Prepaid Rent and Cash: Debiting Prepaid Rent and crediting Cash is a prepayment of rent. There is no adjusting - entry explanation from the given list that exactly matches this common prepayment transaction.
8. Depreciation Expense and Accumulated Depreciation: Debiting Depreciation Expense and crediting Accumulated Depreciation is to record the depreciation of an asset over time. There is no adjusting - entry explanation from the given list that exactly matches this common depreciation transaction.
9. Salaries Expense and Salaries Payable: Debiting Salaries Expense and crediting Salaries Payable is to record accrued salaries expense. There is no adjusting - entry explanation from the given list that exactly matches this common accrued - expense transaction.

Answer:

1. C. To record this period's use of a prepaid expense.
2. D. To record accrued interest revenue.
3. E. To record accrued interest expense.
4. F. To record the earning of previously unearned income.
5. No match from given explanations.
6. No match from given explanations.
7. No match from given explanations.
8. No match from given explanations.
9. No match from given explanations.