Question

If a company initially records prepaid expenses with debits to expense accounts, what type of account...

If a company initially records prepaid expenses with debits to expense accounts, what type of account is debited in the adjusting entries for those prepaid expenses?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer

--If initially the expense account was DEBITED, then at the time of adjusting entry, that expense account will have to CREDITED and respective 'Prepaid expense' asset account will be debited.

--For example, on 1st Apr, Insurance of $ 24000 is paid for 12 months and entry recorded was:

Date Accounts title Debit Credit
01-Apr-20 Insurance expense $24,000
   Cash $24,000

>Now, at the time of adjusting entry on 31 Dec 2020, insurance expense has to be adjusted for 9 months (From 1st Apr to 31 Dec) and 3 month insurance will be prepaid.

>Adjusting entry:

Date Accounts title Debit Credit
01-Apr-20 Prepaid Insurance ($ 24000 x 3/12) $6,000
   Insurance expense $6,000
Add a comment
Know the answer?
Add Answer to:
If a company initially records prepaid expenses with debits to expense accounts, what type of account...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • an adjusting entry that debits and expense and credit a liability is which type? prepaid expense...

    an adjusting entry that debits and expense and credit a liability is which type? prepaid expense accrued expense depreciation expense Cash expense

  • During the year, a company recorded prepayments of expenses in asset accounts, and cash receipts of...

    During the year, a company recorded prepayments of expenses in asset accounts, and cash receipts of unearned revenues in liability accounts. At the end of its annual accounting period, the company must make three adjusting entries. (1) Record the yearly depreciation expense for equipment. (2) Accrue utilities expense. (3) Adjust the Unearned Services Revenue account to recognize earned revenue. 23 For each of the adjusting entries (1). (2), and (3), indicate the account to be debited and the account to...

  • During the year, a company recorded prepayments of expenses in asset accounts, and cash receipts of...

    During the year, a company recorded prepayments of expenses in asset accounts, and cash receipts of uneamed revenues in liability accounts. At the end of its annual accounting period, the company must make three adjusting entries (1) Accrue salaries expense (2) Adjust the Uneared Services Revenue account to recognize earned revenue (3) Record services revenue eamed for which cash will be received the following period. through For each of the adjusting entries (1), (2), and (3. indicate the account to...

  • Adjusting entries affect at least one balance sheet account and at least one income statement account....

    Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited. Indicate which of the accounts is the income statement account and which is the balance sheet account. Assume the company records prepayments of expenses in asset accounts, and cash receipts of unearned revenues in liability accounts. a. Entry to record revenue earned that was previously received as cash...

  • Adjusting entries affect at least one balance sheet account and at least one income statement account....

    Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited. Indicate which of the accounts is the income statement account and which is the balance sheet account. Assume the company records prepayments of expenses in asset accounts, and cash receipts of unearned revenues in liability accounts. B a. Entry to record revenue earned but not yet billed (nor...

  • Adjusting entries affect at least one balance sheet account and at least one income statement account....

    Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below. Identify the account to be debited and the account to be credited. Indicate which of the accounts is the income statement account and which is the balance sheet account. Assume the company records prepayments of expenses in asset accounts, and cash receipts of unearned revenues in liability accounts. a. Entry to record revenue earned that was previously received as cash...

  • understate prepaid expenses understate both liabilities and expenses overstate liabilities On November 1, 20X4, ComCo debits...

    understate prepaid expenses understate both liabilities and expenses overstate liabilities On November 1, 20X4, ComCo debits Cash and credits Notes Payable for $20.000 for a note maturing May 1, 20X5. At that time. ComCo must repay the entire $20,000 plus interest of 6% accrued annually. If no adjusting entry is made at year-end 20X4.Com.co will record a correcting entry that: debits Interest Expense for $400 credits Interest Payable for SIOO c. debits Interest Expense for $200 d. none of the...

  • wg that Modish records the cash receipt of unearned revenue by initially crediting a liability account....

    wg that Modish records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry the Unearned Revenue and Service Revenue T-accounts. Make sure to include she beginning balance and additional unearned revenue in the Unearned Revenue T-account. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the...

  • Adjustment for Prepaid Expense The prepaid Insurance account had a beginning balance of $11,500 and was...

    Adjustment for Prepaid Expense The prepaid Insurance account had a beginning balance of $11,500 and was debited for $18,000 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $13,000. If an amour box does not require an entry, leave it blank. Insurance Expense

  • Adjustment for Prepaid Expense The prepaid insurance account had a beginning balance of $5,860 and was...

    Adjustment for Prepaid Expense The prepaid insurance account had a beginning balance of $5,860 and was debited for $3,050 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $2,320. If an amount box does not require an entry, leave it blank.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT