Classifying and journalizing adjusting entries Consider the following independent situations as on 31 December 2019: an On 1 March, when the business prepaid $1200 for a two-year insurance policy, the business debited Prepaid insurance and credited Cash. b Equipment depreciation was $800. c On 1 September, a business collected $4 400 rent in advance, debiting Cash and crediting Unearned rent revenue. The tenant was paying one year’s rent in advance.
On 31 December the business must account for the amount of rent it has earned. d Salary expense is $1 900 per day—Monday to Friday—and the business pays employees each Friday. This year 31 December falls on a Wednesday. e The unadjusted balance of the Supplies account is $4 500. Supplies on hand total $2 700. 1.) For each situation, indicate which category of adjustment is described and explain why such an adjustment is necessary? 2.) Journalise the adjusting entries (including narrations) needed on 31 December for each situation. Use the letters to label the journal entries. Get Accounting Homework Help Today.
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