Question Two:

Ali Co. encounters the following situations:

1. Received 4,000 SAR from a customer in 2016 for services to be performed in 2017.

2. Incurs utility expense which is not yet paid in cash or recorded. 3. Employees worked

3 days in 2016 but will not be paid until 2017.

4. Earned service revenue but has not yet received cash or recorded the transaction.

5. Paid 2,400 SAR office rent on December 1 for six months.

6. Received cash in advance for future services.

7. Performed 1,200 SAR worth of consulting services to a client in December 2016. However, the client is not billed yet.

8. Paid cash for an expense and recorded an asset until the item was used up.

9. Purchased 900 SAR of supplies in 2016; at year-end, 400 SAR of supplies remain unused.

10. Purchased equipment on January 1, 2016; the equipment will be used for 5 years.

11. Borrowed 10,000 SAR on October 1, 2016, signing an 8% one-year note payable (Interest).

Requirement: What type of adjusting entry is needed in each situation. Is it a Prepaid Expense? An Unearned Revenue? An Accrued Expense? An Accrued Revenue? As an example, first situation is solved: 1. Unearned revenue. 2. 3.