Chapter 3, Problem 3.7S

LO 3

(Learning Objective 3: Adjust the accounts) Answer the following questions about prepaid expenses:

1. a. On March 1, Meadow Tree Service prepaid $7,200 for six month’s rent. Give the adjusting entry to record rent expense at March 31. Include the data of the entry and an explanation. Then post an amounts to the two accounts involved, and show their balances at March 31. Meadow adjusts the accounts only at March 31, the end of its fiscal year.
2. b. On March 1, Meadow Tree Service paid $1,050 for supplies, At March 31, Meadow has $400 of supplies on hand. Make the required journal entry at March 31. Then post all amounts to the accounts and show their balances at March 31. Assume no beginning balance in supplies.