Expense Adjustments Faraday Electronic Service repairs stereos and DVD players. During the year, Faraday engaged in the following activities: a. On September 1, Faraday paid Wausau Insurance $6,360 for its liability insurance for the next 12 months. The full amount of the prepayment was debited to prepaid insurance. b. At December 31, Faraday estimates that $1,640 of utility costs are unrecorded and unpaid. c. Faraday rents its testing equipment from JVC. Equipment rent in the amount of $2,670 is unpaid and unrecorded at December 31. d. In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television station. The station billed Faraday $4,800 for 3 months' sponsorship-November, December, and January-in advance. When these payments were made, Faraday debited prepaid advertising. At December 31, 2 months' advertising has been used and 1 month remains unused. Required: 1. Prepare adjusting entries at December 31 for these four activities. If an amount box does not require an entry, leave it blank. Dec. 31 Insurance Expense Prepaid Insurance 530 X 530 X Dec. 31 Utilities Expense 1,640 Utilities Payable 1,640 Dec. 31 Rent Expense Rent Payable 2,670 2,670 Dec. 31 Advertising Expense 4,800 X Prepaid Advertising 4,800 X
Expense Adjustments Faraday Electronic Service repairs stereos and DVD players. During the year, Faraday engaged in the following activities: a. On September 1, Faraday paid Wausau Insurance $6,360 for its liability insurance for the next 12 months. The full amount of the prepayment was debited to prepaid insurance. b. At December 31, Faraday estimates that $1,640 of utility costs are unrecorded and unpaid. c. Faraday rents its testing equipment from JVC. Equipment rent in the amount of $2,670 is unpaid and unrecorded at December 31. d. In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television station. The station billed Faraday $4,800 for 3 months' sponsorship-November, December, and January-in advance. When these payments were made, Faraday debited prepaid advertising. At December 31, 2 months' advertising has been used and 1 month remains unused. Required: 1. Prepare adjusting entries at December 31 for these four activities. If an amount box does not require an entry, leave it blank. Dec. 31 Insurance Expense Prepaid Insurance 530 X 530 X Dec. 31 Utilities Expense 1,640 Utilities Payable 1,640 Dec. 31 Rent Expense Rent Payable 2,670 2,670 Dec. 31 Advertising Expense 4,800 X Prepaid Advertising 4,800 X
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...
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Transcribed Image Text:Expense Adjustments
Faraday Electronic Service repairs stereos and DVD players. During the year, Faraday engaged in the following activities:
a. On September 1, Faraday paid Wausau Insurance $6,360 for its liability insurance for the next 12 months. The full amount of the prepayment was debited to
prepaid insurance.
b. At December 31, Faraday estimates that $1,640 of utility costs are unrecorded and unpaid.
c. Faraday rents its testing equipment from JVC. Equipment rent in the amount of $2,670 is unpaid and unrecorded at December 31.
d. In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television station. The station billed Faraday
$4,800 for 3 months' sponsorship-November, December, and January-in advance. When these payments were made, Faraday debited prepaid advertising. At
December 31, 2 months' advertising has been used and 1 month remains unused.
Required:
1. Prepare adjusting entries at December 31 for these four activities. If an amount box does not require an entry, leave it blank.
Dec. 31 Insurance Expense
Prepaid Insurance
530 X
530 X
Dec. 31 Utilities Expense
1,640
Utilities Payable
1,640
Dec. 31 Rent Expense
Rent Payable
2,670
2,670
Dec. 31 Advertising Expense
4,800 X
Prepaid Advertising
4,800 X
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