Practice prompt · Q:transactions-to-statements/accrual-adjustments-001

Prepare two period-end accruals

Formative numerical check on accrued revenue, accrued expense, and the adjusted trial balance.

Updated Sep 6, 2026 Review due Nov 6, 2026

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A company's equal December 31 unadjusted trial balance contains $8,000 Cash and $8,000 Owners' Equity. It has not recorded $3,600 of completed unbilled service or $1,200 of December utility service that will be billed and paid in January. Assume the service qualifies for revenue and payment is an unconditional right. There are no other unadjusted balances. No related cash moved by December 31. Which adjustments and adjusted totals are correct?

Choose the best answer. A Debit Accounts Receivable and credit Service Revenue $3,600; debit Utilities Expense and credit Utilities Payable $1,200; adjusted trial-balance totals are $12,800 on each side. B Debit Cash and credit Service Revenue $3,600; debit Utilities Expense and credit Cash $1,200; adjusted trial-balance totals are $11,600 on each side. C Record only the $2,400 net difference as a debit to Accounts Receivable and a credit to Service Revenue; adjusted totals are $10,400 on each side. D Credit Accounts Receivable and debit Service Revenue $3,600; credit Utilities Expense and debit Utilities Payable $1,200; adjusted totals are $12,800 on each side.

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Answer: A

December includes $3,600 of performance and $1,200 of utility service consumed. The entries debit Accounts Receivable and credit Service Revenue $3,600, then debit Utilities Expense and credit Utilities Payable $1,200. With the $8,000 opening Cash and equity balances, adjusted debits are $8,000 Cash plus $3,600 Receivable plus $1,200 Expense, or $12,800; adjusted credits are $8,000 Equity plus $3,600 Revenue plus $1,200 Payable, also $12,800.