Debit Credit Cosh $ $953,184$ Short term investments $167,000$ Fair value adjustment $($Trading$)-$ Accounte receivable $190,300$ Allowance for doubtful accounts $$ Inventory $-$ Purchases $350,000$ Prepaid insurance $24,600$ LT $($Debt$)$ investments $($HTM$)177\mathrm{.}824$ Land $75,000$ Building $150,000$ Accumulated deprecistion: building $4,000$ Equipment $60,000$ Accumulated deprecistion: equipment $20,000$ Potent $37,500$ Accounte paysble $75,240$ Notes paysble $235,000$ Income toxes poysble $63,800$ Unesmed rent revenue $36,000$ Bonds Paysble $800,000$ Premium on Bonds Payable $61,771$ Common stock $86,000$ PIC In Excess of Par$-$Common Stock $13,000$ Retained earningz $-$ Treasury toock $49,000$ Dividends $41,000$ Soles Revenue $1,170,897$ Advertising expense $8,400$ woges expense $67,600$ Office expense $21,700$ Amortization Expense $-$ Deprecistion expense $24,000$ Utilities expense $31,000$ Insurance expense $73,800$ Income toxes expense $63,800$

$1$ On March $1,$ ABC purchased a one$-$year liability insurance policy for $$98,400.$

Upon purchase, the following journal entry was made:

Dr Prepaid insurance

$98,400$

Cr Cash

$98,400$

The expired portion of insurance must be recorded as of $12//31//$X$1.$

Notice that the expired portion from March through November has been recorded already.

Make sure that the Prepaid Insurance balance after the adjusting entry is correct.

$2$ Depreciation expense must be recorded for the month of December.

The building was purchased with cash on February $1,20$ X $1$ for $$150,000$ with a remaining useful life of $30$ years and a salvage value of $$6,000.$

The method of depreciation for the building is straight$-$line.

The equipment was purchased with cash on February $1,20$ X $1$ for $$60,000$ with a remaining useful life of $5$ years and a salvage value of $$3,000.$

The method of depreciation for the equipment is double$-$declining balance.

Depreciation has been recorded for the building and equipment for months February through November.

$3$ On December $1,$ XYZ Co$.$ agreed to rent space in ABC $\text{'}$s building for $$12,000$ per month,

and XYZ paid ABC on December $1$ in advance for the first three months' rent.

The entry made on December $1$ was as follows:

Dr Cash

$36,000$

Cr Unearned rent revenue

$36,000$

The unearned revenue account must be adjusted to reflect the amount earned as of $12//31//$X$1.$