Question

A review of the accounts of Metlock Accountants reflected the following transactions, which may or may not require adjustment for the year ended December 31, 2020. The Prepaid Rent account shows a debit of $7,340 paid October 1, 2020, for a one-year lease that started on that day. On November 1, 2020, Services Revenue was credited for $2,060 that was paid by a client for audit services to be performed in January On June 1, 2020, a cheque in the amount of $6,360 was issued for a two-year insurance policy starting on June 1, 2020. The amount was charged to Insurance Expense. Interest of $1,460 has accrued on notes payable. 1. 2 3. 4. Prepare the adjusting entry for each item. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2. 3.

Answer 1

Adjusting Entries

Account Titles	Debit	Credit
Rent Expense	$          1,835
Prepaid Rent		$            1,835
Service Revenue	$          2,060
Unearned Revenue		$            2,060
Prepaid Insurance	$          4,505
Insurance expense		$            4,505
Interest Expense	$          1,460
Interest Payable		$            1,460

Reversing Entries

Account Titles	Debit	Credit
No entry
No entry
No entry
Interest Payable	$          1,460
Interest Expense		$            1,460

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