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If an adjustment is needed for prepaid expenses the

01/10/2021 Client: muhammad11 Deadline: 2 Day

We have learned about four types of adjustments: (1) prepaid expenses, (2) unearned revenues, (3) accrued revenues, and (4) accrued expenses.

Select one specific adjusting entry that falls under one of the four types, enter it in the subject box, and post the following:

1. A description of the adjustment and why it is necessary.

2. Provide an example of the transaction; include the debit and credit, with dates and amounts in the proper journal entry format.

3. In your replies discuss the status of the accounts affected prior to the adjustment (understated or overstated), and explain the impact of the adjustment on the financial statements.

The following example is for supplies:

The adjusting entry for supplies is a prepaid expense entry. Supplies requires an adjustment because the amount in the supplies account does not represent what we actually have on hand. The the amount that we have used is an expense.
The example using supplies: We determine that $500 in supplies have been used during the period. The journal entry is:
12/31/19 Supplies expense 500
Supplies 500

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