The Gladiator Sports Company has the following account balances at the end of the year before any adjustments have been made:
Prepaid insurance ...... $9,000
Unearned revenue ....... 5,300
Wages expense ........ 7,590
Taxes payable ....... 4,000
Interest revenue ........ 2,000
The company also has the following information available at the end of the year:
• Of the prepaid insurance shown, $1,000 has now expired.
• Of the unearned revenue shown, $3,000 has been earned.
• The company must accrue an additional $2,250 of wages expense.
• The company has earned an additional $750 of interest revenue, not yet recorded or received.
1. Use the accounting equation to show the adjustments needed at year end.
2. Calculate the balances in each account after the adjustments.
3. Indicate whether each adjustment is related to an accrual or a deferral.