In each of the following transactions (a) through (c) for Romney's Marketing Company, use the three-step process illustrated in the chapter to record the adjusting entry at the end of the current year. The process includes (1) determining if revenue was earned or an expense was incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment.
a. Collected $1,200 rent for the period December 1 of the current year to April 1 of next year, which was credited to Unearned Rent Revenue on December 1.
b. Purchased a machine for $32,000 cash on January 1. The company estimates annual depreciation at $3,200.
c. Paid $5,000 for a two-year insurance premium on July 1 of the current year; debited Prepaid Insurance for that amount.