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A firm purchased a four-year insurance policy for $8,640 on July 1, 2019. The $8,640 was debited to the Prepaid Insuranceaccount.

2. On December 1, 2019, a firm signed a contract with a local radio station for advertising that will extend over a three-year period. The firm paid $42,480 in advance and debited the amount to Prepaid Advertising.

Prepare end-of-month adjusting entries for each of the above situations.

Respuesta :

TomShelby

Answer:

insurance expense        1,080 debit

      prepaid insurance            1,080 credit

advertizing expense      1,190 debit

    prepaid advertising          1,190 credit

Explanation:

We need to do the adjusting entries for December 31th 2019

solving for expired insurnace from July 1st to Dec 31th

8,640  x  6/ 48 months = 1,080

solving for accrued advertize from Dec 1st to Dec 31th

42,840 x 1/36 = 1,190

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