rief Exercise 46 n July 1 2017 Ling Co pays 7200 to Cullumbe

rief Exercise 4-6 n July 1, 2017, Ling Co. pays $7,200 to Cullumber Compan ransaction and the December 31 adjustment in the tabular summary that negative sign (or parentheses) in front of the amount entered for the particular ny for a 2-year insurance contract. Both companies have fiscal years ending December 31. For Ling Co, enter the July 1 Asset, Liability or Equity item that was reduced.) t follows.(f a transaction results in a decrease in Assets, Liabilities or Stockholders Equity, place Assets Liabilities + Stockholders\' Equity Com Stock+Rev. Exp.Div Cash Prepaid Insurance ul. 1 Dec. 31 Bal.

Solution

   ASSETS LIABILITIES STOCKHOLERS EQUITY Cash prepaid = common revenue expense Dividend insurance stock 1-Jul -7,200 7,200 31-Dec -1,800 -1800 Balance -7,200 5,400 -1800 prepaid insurance =7200 for 24 months or 2 years to be expensed from july 1 to dec 31 that is 6 months, thus insurance expense will be 7200/24*6 = 1800