Question

Corbin's Café received a bill from the electric company for electricity used. The bill is for $325 and has not been paid yet. What adjusting entry would Corbin's Café make? Account Titles and Explanation Debit Credit

Answer 1

Accounts Title and explanation	Debit	Credit
electricity expense A/ c. Dr	325
To o/s expense A/c		325
Adjustment entry for outstanding electricity expense

Electricty account is a expense Account and the expense is increased so debit .

outstanding electricity is a liability and the liability has increased so credit.

Entry 2 .

Accounts title and explanation	Debit	Credit
Prepaid insurance A/c. Dr.	1100
To Insurance A/c		1100
Prepaid insurance for 11 months

Prepaid insurance is a asset so debit increase in asset .

Insurance is an expense and the expense is reduced so credit .

At the time of purchase of insurance the entry is

Insurance 1200

  To bank. 1200

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