Chapter 3, Problem 3.16SE

1.

To determine

Concept Introduction:

Deferred expense: The advance payments for future expenses, when a business prepays an expense it can debit an asset account and defer the recognition of the expense are a deferred expense. Deferring an expense creates an asset, thus the account is debited to recognize this prepayment.

The adjustment entry for accrued salaries on December 31.

2.

To determine

Concept Introduction:

Adjusting entries: The entries are recorded at the end of the accounting period and record revenues to the period in which they are earned and expenses to the period in which they occur. Adjustment entries also update assets and liabilities. Adjustment entries are also required to present true and fair financial statements.

The adjustment entry to record earning of revenue.