Duncan Services initially records prepaid expenses as expenses, and unearned revenues as revenues. Then at the end of the year, they make the necessary adjustments to accrual basis. On December 15, Duncan collected revenues of $1,000 in advance from a new client, and agreed to provide services to the client for the period of December 15 through January 15 of the following year. Please provide the adjusting entry that would be needed at year-end.

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The Answer of Duncan Services initially records prepaid expenses as expenses, and unearned revenues as revenues. Then at the end of the year, they make the necessary adjustments to accrual basis. On December 15, Duncan collected revenues of $1,000 in advance from a new client, and agreed to provide services to the client for the period of December 15 through January 15 of the following year. Please provide the adjusting entry that would be needed at year-end.

Duncan Services Initially Records Prepaid Expenses as Expenses, and Unearned