Objective: The adjustment necessary to convert the Trial balance from Cash basis to Accrual as of December 31, year 2.
Transaction: On May 1, year 2, Company X paid $8,700 to renew its comprehensive insurance coverage for one year. The premium on the previous policy, which expired on April 30, year 2, was $7,800.
Question: What are the adjustments necessary for the above transaction (from cash basis to accrual)? And What accounts will be affect?
