Chapter 3, Problem 26QS

Cal Consulting follows the practice that prepayments are debited to expense when paid, and unearnedrevenues are credited to revenue when cash is received. Given this company’s accounting practices,which one of the following applies to the preparation of adjusting entries at the end of its first accounting period?
a. Unearned fees (on which cash was receivedin advance earlier in the period) are recorded with a debitto Consulting Fees Earned of $500 and a credit to Unearned Consulting Fees of $500.
b. Unpaid salaries of $400 arc recorded with a debit to Prepaid Salaries of $400 and a credit to SalariesExpense of $400.
c. Office supplies purchased for the period were $1,000. The cost of unused office supplies of $650 isrecorded with a debit to Supplies Expense of $650 and a credit to Office Supplies of $650.
d. Earned but unbilled (and unrecorded) consulting fees for the period were $1,200, which are recorded with a debit to Unearned Consulting Fees of $1,200 and a credit to Consulting Fees Earnedof $1,200.