Question: For each separate case below follow the 3 step process for

For each separate case below, follow the 3-step process for adjusting the prepaid asset account: Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record an adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.
a. Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A review of insurance policies and payments shows that $900 of unexpired insurance remains at year-end.
b. Prepaid Insurance. The Prepaid Insurance account has a $5,890 debit balance at the start of the year. A review of insurance policies and payments shows $1,040 of insurance has expired by year-end.
c. Prepaid Insurance. On September 1 of the current year, the company prepaid $24,000 for 2 years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $24,000.


View Solution:


Sale on SolutionInn
Sales1
Views476
Comments
  • CreatedNovember 14, 2013
  • Files Included
Post your question
5000