Consider the following transactions for Liner Company: a. Collected $ 2,400 rent for the period December 1,

Question:

Consider the following transactions for Liner Company:

a. Collected $ 2,400 rent for the period December 1, 2014, to April 1, 2015, which was credited to deferred rent revenue on December 1, 2014.

b. Paid $ 1,800 for a one- year insurance premium on July 1, 2014; debited prepaid insurance for that amount.

c. Purchased a machine for $ 10,000 cash on January 1, 2013. The company estimated annual depreciation of $ 2,000.

Required:

1. Prepare the adjusting entries required for the year ended December 31, 2014, using the process illustrated in the chapter.

2. For each of the transactions above, indicate the amount and direction of the effects of the adjusting entry on the elements of the statement of financial position and the statement of earnings. Use the following format: + for increase, €“ for decrease, and €œN€ for no effect.