Adjusting the Accounts

Zaragoza Company accumulates the following adjustment data at December 31, 2020
  1. Services performed but not recorded total $1,000.
  2. Supplies of $300 have been used.
  3. Utility expenses $225 are unpaid.
  4. Services related to unearned service revenue of $260 were performed.
  5. Salaries of $800 are unpaid.
  6. Prepaid insurance totaling $350 has expired.


For each of the above items indicate the following.
  1. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
  2. The status of accounts before adjustment (overstatement or understatement).


Adjustment Analysis

Type of Adjustment
Accounts before Adjustment
1Accrued RevenueAssets Understated and Revenues Understated
2Prepaid ExpenseAssets Overstated and Expense Understated
3Accrued ExpenseExpense Understated and Liabilities Understated
4Unearned RevenueLiabilities Overstated and Revenue Understated
5Prepaid ExpenseAssets Overstated and Expense Understated
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