Q27E - Horngren'S Financial And Managerial Accounting

Question

Lucas Architects recorded the following adjusting entries as of December 31: a. Service Revenue accrued, \(2,600. b. Unearned Revenue that has been earned, \)1,300. c. Office Supplies on hand, \(530. The balance of the Office Supplies account was \)880. d. Salaries owed to employees, \(600. e. One month of Prepaid Rent has expired, \)3,100. f. Depreciation on equipment, $1,075. Journalize any necessary reversing entries for Lucas Architects.

Step-by-Step Solution

Answer

Reversing entries are as follows:

	Accounts and Explanation	Debit	Credit
(a)	Service Revenue	$2,600
	Accounts Receivable		$2,600
	To reverse the accrued revenue adjusting entry
(d)	Salaries Payable	$600
	Salaries Expense		$600
	To reverse the salaries adjusting entry

Step-by-Step-Solution Step 1: Explanation on Reversing Entries

These are the special journal entries, which is opposite of previous adjusting entry made in the books of accounts.

Step 2: Applicability of Reversing Entries

Reversing entries are recorded are recorded for the accrual adjusting entries related to accruals.