Questions: Startech Surveillance Services had the following adjustments as of the end of the year (i) (Click the icon to view the adjustments.) 1. For each situation, indicate which category of adjustment (deferral or accrual) is described. 2. Journalize the adjusting entry needed. 1. For each situation, indicate which category of adjustment (deferral or accrual) is described. Adjustment Category of adjustment a. b. c. d. e. Adjustments a. Equipment amortization 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 totalled 250. The beginning balance of Office Supplies was 600. (Assume no office supplies were purchased during the period.) d. 1,200 of rent revenue was earned but not recorded or received. e. Unearned revenue of 3,000 had been earned.

Startech Surveillance Services had the following adjustments as of the end of the year
(i) (Click the icon to view the adjustments.)
1. For each situation, indicate which category of adjustment (deferral or accrual) is described.
2. Journalize the adjusting entry needed.
1. For each situation, indicate which category of adjustment (deferral or accrual) is described.

Adjustment Category of adjustment
a.
b.
c.
d.
e.

Adjustments
a. Equipment amortization 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 totalled 250. The beginning balance of Office Supplies was 600. (Assume no office supplies were purchased during the period.)
d. 1,200 of rent revenue was earned but not recorded or received.
e. Unearned revenue of 3,000 had been earned.

Transcript text: Startech Surveillance Services had the following adjustments as of the end of the year (i) (Click the icon to view the adjustments.) 1. For each situation, indicate which category of adjustment (deferral or accrual) is described. 2. Journalize the adjusting entry needed. 1. For each situation, indicate which category of adjustment (deferral or accrual) is described. Adjustment Category of adjustment a. $\square$ b. $\square$ c. $\square$ d. $\square$ e. $\square$ Adjustments a. Equipment amortization 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 totalled $\$ 250$. The beginning balance of Office Supplies was $\$ 600$. (Assume no office supplies were purchased during the period.) d. $\$ 1,200$ of rent revenue was earned but not recorded or received. e. Unearned revenue of $\$ 3,000$ had been earned.

Solution

To address the question, we need to determine the category of adjustment for each situation and then journalize the necessary adjusting entries. Adjustments can be categorized as either deferrals or accruals:

Deferrals involve cash flows that occur before the related revenue or expense is recognized. This includes prepaid expenses and unearned revenues.
Accruals involve recognizing revenue or expenses before the cash flow occurs. This includes accrued revenues and accrued expenses.

Let's analyze each adjustment:

Adjustment Categories:

a. Equipment amortization was $1,500.

Category: Deferral. Amortization is the allocation of the cost of an asset over its useful life, which is a deferral of the initial cash outlay for the equipment.

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

Category: Accrual. This is an accrued expense because the expense is recognized before the cash is paid.

c. Office Supplies on hand at the end of the year totaled $250. The beginning balance of Office Supplies was $600. (Assume no office supplies were purchased during the period.)