ACCT110 W3 Homework 1 Protected Vien Word nces Mlings Review

ACCT110 W3 Homework (1) (Protected Vien)- Word nces Mlings Review Help Tell me what you want to do ontsin viruses. Unless you need to edit, it\'s safer to stay in Proftected ViewEnable Editing Directions Question 1: The 3-step process for creating adjusting entries is as follows: 1. Determine what the current account balance equals 2. Determine what the current account balance should equal 3. Record an adjusting journal entry to get from step 1 to step 2 Required: For scenario A and soenario B below, some information is alroady completed. For the missing steps/information, follow the three-step process for adjusting the prepaid asset accounts and complete any missing steps/information. Scenario A-Prepaid insurance: The Prepaid Insurance account has a $6,000 debit balanoe to start the year. A review of insurance policies and payments shows that S1,000 of unexpired insurance remains at the end of the year Step 1: The current account balance equals the S5,000 at the start of the year. Step 2: Determine what the current account balance should equal Step 3: Record the adjusting journal entry to get from step 1 to step 2 Scenario B -Prepaid rent: On October 1 of the curent yoar, the company prepaid S12,000 for one year of rent for facilities being occupied from that day forward. The company debited Prepaid Rent and credited Cash for $12,000. December 31 year-ond statements must be propared. Step 1: Deternmine what the current account balance equals Step 2: The current account balance should equal 59,000

Solution

Question 1

Scenario A

Step 2 Current account Balance should be equal to 1000

Step 3 Adjusting Entries

Insurance Expense DR 4000

Prepaid Insurace CR ................4000

Scenario B

Step 1 Current Balance Equal $12000

Step 3

Rent Expense DR....3000

Prepaid Rent CR...............3000

Question No 2

Scenario C

Step 2 Current account Balance should be equal to 24000*(12-4)/12 =16000

Step 3

Unaearned rent revenue DR 6000

Rent Revenue CR.................6000

Scenario D

Step 1 current Balance equal to

Step 3

Unearned Services Rev. $200
Services Rev. $200