For each separate case below, follow the three-step process for adjusting the prepald asset account at Deceml Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Prepaid Insurance. The Prepaid Insurance account has a $6,100 debit balance to start the year. A review of insurance policies shows that $1,600 of unexpired insurance remains at year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. b. Prepaid Insurance. The Prepaid Insurance account has a $7,290 debit balance at the start of the year. A review of insurance policies shows $1,600 of insurance has expired by year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. c. Prepaid Rent. On September 1 of the current year, the company prepaid $40,800 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $40,800. Prepaid Rent Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.
For each separate case below, follow the three-step process for adjusting the prepald asset account at Deceml Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Prepaid Insurance. The Prepaid Insurance account has a $6,100 debit balance to start the year. A review of insurance policies shows that $1,600 of unexpired insurance remains at year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. b. Prepaid Insurance. The Prepaid Insurance account has a $7,290 debit balance at the start of the year. A review of insurance policies shows $1,600 of insurance has expired by year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. c. Prepaid Rent. On September 1 of the current year, the company prepaid $40,800 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $40,800. Prepaid Rent Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:For each separate case below, follow the three-step process for adjusting the prepald asset account at Deceml
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
a. Prepaid Insurance. The Prepaid Insurance account has a $6,100 debit balance to start the year. A review of
insurance policies shows that $1,600 of unexpired insurance remains at year-end.
Prepaid Insurance
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.
b. Prepaid Insurance. The Prepaid Insurance account has a $7,290 debit balance at the start of the year. A review of
insurance policies shows $1,600 of insurance has expired by year-end.
Prepaid Insurance
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.
c. Prepaid Rent. On September 1 of the current year, the company prepaid $40,800 for two years of rent for facilities
being occupied that day. The company debited Prepaid Rent and credited Cash for $40,800.
Prepaid Rent
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.
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