BT Spa had the following transactions during the year. Its year-end is on June 30.
a. The Unearned Revenue account showed a balance of $800, which represented four gift certificates of $200 each sold in June. Three gift certificates had been redeemed in June.
b. The Prepaid Rent account showed a balance of $6,000, which represented six months’ rent paid on April 1.
c. An exercise machine was purchased on March 1 for $7,500. BT estimated that the machine could last 8 years, with a salvage value of $300 at the end of the 8th year.
d. Five employees each earned $100/day. Salary for the last seven days of June would be paid on July 2nd.
e. A fitness service was performed for a business client on June 30 for $350.
The invoice was sent on July 5th, after the year-end date.
1. Identify each of the above transactions as accrued revenue, accrued expense, deferred revenue, or deferred expense.
2. Record the adjusting entry for each transaction.