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    gclayton62's Avatar
    gclayton62 Posts: 5, Reputation: 1
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    #1

    Sep 16, 2008, 06:27 PM
    Adjusted Trial Balance
    The prepaid insurance is $7,200 and the data of unexpired insurance of $2,700 is needed to determine year end adjustment. What is the ending trial balance?
    AdamUTsel's Avatar
    AdamUTsel Posts: 100, Reputation: 2
    Junior Member
    		  
    #2

    Sep 17, 2008, 11:53 AM
    You have used up $4,500 of the value of the policy. Therefore, you would need to recognize the expense on this portion of the policy.

    When the policy was first purchased (prepaid for) you recorded:

    Dr. Prepaid Insurance 7200
    Cr. Cash 7200

    As the policy begins to expire, you recognize the expense. Since you haven't recorded anything so far, you need to recognize the full usage for the year, the 7200-2700, or 4500.

    Dr. Insurance Expense 4500
    Cr. Prepaid 4500
    gclayton62's Avatar
    gclayton62 Posts: 5, Reputation: 1
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    #3

    Sep 22, 2008, 06:52 PM

    How do you post this transaction in a journal

    On Oct 1st paid three months rent on a lease rental contract, $3,600
    gclayton62's Avatar
    gclayton62 Posts: 5, Reputation: 1
    New Member
    		  
    #4

    Sep 22, 2008, 06:54 PM
    How do you post this transaction in a journal

    On Oct 12 recorded services provided on account of $3,750
    AdamUTsel's Avatar
    AdamUTsel Posts: 100, Reputation: 2
    Junior Member
    		  
    #5

    Sep 23, 2008, 06:34 AM

    Prepaid rent:

    DR. Prepaid rent 3600
    CR. Cash 3600

    As each month passes, you should reduce your prepaid by 1/3 (1 month) and recognize the rent expense.

    DR. Rent Expense 1200
    CR. Prepaid Rent 1200


    Services on Account:

    DR: Account Receivable 3750
    CR: Service Revenue 3750
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