Duncan Services Records Prepaid Expenses as Expenses When Incurred, and Unearned

Essay

Duncan Services records prepaid expenses as expenses when incurred, and unearned revenues as revenues when the payment is received in advance. At the end of the year, Duncan makes the necessary adjustments based on accrual basis accounting. On July 1, Duncan paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year. Provide the year-end adjusting entry for rent prepayment.