For each of the following situations, determine the necessary adjustments.
1. A firm purchased a two-year insurance policy for $6,000 on July 1, 2007. T $6,000 was debited to the prepaid insurance account. What adjustment should be made to record expired insurance on the firm's July 31, 2007,worksheet?
2. On December 1, 2007, a firm signed a contractwith a local radio station for advertising that will extend over a one-year. The firm paid $5,400 in advance and debited the amount to Prepaid Advertising. What adjustment shouldbe made to record expired advertising on the firm's Decemr 31, 2007, worksheet?
Adjustment would be that insurance expenses will be recorded for six months and it will be 2000/4=$500
The entry will be
Insurance expenses debit $500
Prepaid insurance credit $500
Adjustment would be that advertising expenses will be recorded for one month and it will be ...
This explains the way to make journal entries for transaction involving adjustments