e-6 and e-7

E4-6 Determining Adjustments and Accounting Equation Effects LO 4-1, 4-2 Fes Company is making adjusting journal entries for the year ended December 31, 2021. In developing information for the adjusting journal entries, you learned the following: 4. A two-year insurance premium of $7.200 was paid on January 1, 2021. for coverage beginning on that date. As of December 31, 2021, the unadjusted balances were $7,200 for Prepaid Insurance and $0 for Insurance Expense. b. At December 31, 2021. you obtained the following data relating to supplies. $15,000 Unadjusted balance in Supplies on December 31 Unadjusted balance in Supplies Expense on December 31 Supplies on hand, counted on December 31 72,000 10,000 Required: 1. Of the $7.200 paid for insurance, what amount should be reported on the 2021 income statement as Insurance Expense? What amount should be reported on the December 31, 2021, balance sheet as Prepaid Insurance? 2. What amount should be reported on the 2021 income statement as Supplies Expense? What amount should be reported on the December 31, 2021, balance sheet as Supplies? 3. Using the format shown in the demonstration case, indicate the accounting equation effects of the adjustment required for (a) insurance and (b) supplies E4-7 Recording Adjusting Journal Entries LO 4-1, 4-2 Refer to E4-6. Required: Prepare adjusting journal entries at December 31, 2021. for (a) insurance and (b) supplies