Question

Instructions The balance in the unearned fees account, before adjustment at the end of the year, is $18,000. 

Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,600. 

The balance in the prepaid insurance account, before adjustment at the end of the year, is $27,000. The year end is March 31. 

Journalize the March 31 adjusting entry required under each of the following alternatives for determining the amount of the adjustment: 

(a) the amount of insurance expired during the year is $20.250. 

(b) the amount of unexpired insurance applicable to future periods is $6.750 Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Unearned fee, beginning = $18,000

Unearned fee, ending = $3,600

Fee earned = Unearned fee beginning - Unearned fee ending

= 18,000-3,600

= $14,400

Date	General Journal	Debit	Credit
	Unearned fee	$14,400
	Fee revenue		$14,400
	( To record fee revenue earned)

a.

Prepaid insurance, beginning = $27,000

Insurance expired during the year ( Insurance expense) = $20,250

Date	General Journal	Debit	Credit
March 31	Insurance expense	$20,250
	Prepaid insurance		$20,250
	( To record insurance expense)

b.

Prepaid insurance, beginning = $27,000

Prepaid insurance, ending = $6,750

Insurance expense =  Prepaid insurance, beginning - Prepaid insurance, ending

= 27,000-6,250

= $20,250

Date	General Journal	Debit	Credit
March 31	Insurance expense	$20,250
	Prepaid insurance		$20,250
	( To record insurance expense)

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