Calculating adjustments.
For each of the following situations, determine the necessary adjustments.
1. A firm purchased a two-year insurance policy for $3,000 on July 1, 2010. The $3,000 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance on the firm’s July 31, 2010, worksheet?
2. On December 1, 2010, a firm signed a contract with a local radio station for advertising that will extend over a one-year period. The firm paid $10,800 in advance and debited the amount to Prepaid Advertising. What adjustment should be made to record expired advertising on the firm’s December 31, 2010, worksheet?
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