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    topaz1839's Avatar
    topaz1839 Posts: 6, Reputation: 1
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    #1

    Sep 5, 2011, 08:40 PM
    I am working on a 10 colunm end of the year worksheet
    I am working on a 10 colunm end of the year worksheet and I need help with prepaid insurance and earned rental income.I can't get my adjusted trail balance to equal out. The prepaid trail balance is 8100.00.what would the adjustment be if I have a 12 month prepaid insurance that was purchase on Feb 1 of the current year.I am working on Sept. End of the year worksheet.How would I debit and credit this amount.My next problem is the earned rental income which need to have a adjustment of 5000.00. The unearned rent account has a credit amount of 15000.00.Where will I put this adjustment of 5000.00.Will I credit the unearned rent revenue and debit the rent revenue with the 5000.00.Please help.. thank you
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 6, 2011, 02:20 PM
    For Prepaid Insurance you will take your amount * 8/12 for 9 months of use (Feb to Sept) out of 12 months.

    So $8100 * 8/12 equals the amount of insurance used during the period.

    Your entry will be:
    Debit Insurance Expense for the amount calculated above
    Credit Prepaid Insurance for the amount

    Your entry for rental income will be:
    Debit Unearned Rental Revenue for the amount given
    Credit Rental Revenue for the amount
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