Techco Computer Services had the following transactions during the year. Its year- end is on September 30.
a. One-year insurance premium $1,800 was purchased on April 30. Coverage began on May 1.
b. The monthly payroll was $4,200, and the payment to employees was on the 1st of the following month.
c. A server was purchased on February 1 for $16,000. Techco estimated that the server could last 5 years, with a salvage value of $1,000 at the end of the 5th year.
d. Computer maintenance service was performed for a client on September 28 for $2,600. The invoice was sent on October 5, after the year-end date.
e. The Unearned Service Revenue account showed a balance of $5,200, which represents a four-month service contract. Three-quarters of the service was performed by the end of September.
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.