Your Best Advisors, a service company, uses reversing entries. On March 31, 2014, they prepared the following adjusting entry to accrue Utilities Expense: $$\begin{array} { | c | r | r | }
\hline \text { Utilities Expense } & 900 & \
\hline \text { Accounts Payable } & & 900 \
\hline
\end{array}$$ Which of the following entries is the correct reversing entry to be prepared on April 1, 2014?
A) $$\begin{array} { | c | r | r | }
\hline \text { Accounts Payable } & 900 & \
\hline \text { Utilities Expense } & & 900 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | }
\hline \text { Utilities Expense } & 900 & \
\hline \text { Income Summary } & & 900 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | }
\hline \text { Cash } & 900 & \
\hline \text { Utilities Expense } & & 900 \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | }
\hline \text { Utilities Expense } & 900 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$$

Question

Your Best Advisors, a service company, uses reversing entries. On March 31, 2014, they prepared the following adjusting entry to accrue Utilities Expense: $$\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 900 & \
\hline \text { Accounts Payable } & & 900 \
\hline
\end{array}$$ Which of the following entries is the correct reversing entry to be prepared on April 1, 2014?
A) $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 900 & \
\hline \text { Utilities Expense } & & 900 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 900 & \
\hline \text { Income Summary } & & 900 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Utilities Expense } & & 900 \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 900 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The reversing entry should be the exact opposite of the adjusting entry, with the same accounts but the debits and credits switched. Therefore, in this case, the correct reversing entry would be to credit Accounts Payable for $900 and debit Utilities Expense for $900. This is exactly what choice A states. Choice B is incorrect because Income Summary is not related to this adjusting entry. Choice C is incorrect because there is no mention of Cash in the adjusting entry. Choice D is incorrect because there is no mention of Accounts Receivable in the adjusting entry.

Your Best Advisors, a Service Company, Uses Reversing Entries Utilities Expense 900 Accounts Payable 900\begin{array} { | c | r | r | } \hline \text { Utilities Expense } & 900 & \\\hline \text { Accounts Payable } & & 900 \\\hline\end{array} Utilities Expense Accounts Payable ​900​900​​

Your Best Advisors, a Service Company, Uses Reversing Entries $\begin{array} { | c | r | r | } \hline \text { Utilities Expense } & 900 & \\\hline \text { Accounts Payable } & & 900 \\\hline\end{array}$