Question: TJ s Tavern paid 10 800 on February 1 2010 for a
TJ’s Tavern paid $10,800 on February 1, 2010, for a three-year insurance policy. In the company’s information system, this was recorded as prepaid insurance. Use the accounting equation to show the adjustment TJ’s will need to make to properly report expenses when preparing the July 31, 2010, financial statements. (Assume no adjustments have been made to prepaid insurance prior to July 31.)
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