Question

a. Prepaid Insurance. The Prepaid Insurance account has a $5,500 debit balance to start the year. A review of insurance policies shows that $1,300 of unexpired insurance remains at year-end. Prepaid insurance Debit Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Debit Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. Insurance oxpense Prepaid insurance b. Prepaid Insurance. The Prepaid Insurance account has a $6,690 debit balance at the start of the year. A review of insurance policies shows $1,360 of insurance has expired by year-end. Prepaid insurance ces Debit Step 1: Determine what the current account balance equals. Debit 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. Insurance expense Prepaid insurance c. Prepaid Rent. On September 1 of the current year, the company prepaid $33,600 for two years of rent for facilities being occupled that day. The company debited Prepaid Rent and credited Cash for $33,600. < Prev 5 of 9 Next >

Answer 1

a
			Prepaid Insurance
Step 1: Current account balance equals	5500	Debit	5500
				4200
Step 2: Current account balance should equal	1300	Debit	1300
Step 3:
Insurance expense	4200
Prepaid Insurance		4200
b
			Prepaid Insurance
Step 1: Current account balance equals	6690	Debit	6690
				1360
Step 2: Current account balance should equal	5330	Debit	5330
Step 3:
Insurance expense	1360
Prepaid Insurance		1360
c
			Prepaid Rent
Step 1: Current account balance equals	33600	Debit	33600
				5600
Step 2: Current account balance should equal	28000	Debit	28000
Step 3:
Rent expense	5600
Prepaid Rent		5600

Workings:
Rent expense for 4 months	5600	=33600/24*4