1. A firm purchased a four-year insurance policy for $8,640 on July 1, 2019. The $8,640...

1. 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.

Expert Solution

Solution:

Journal Entries
Event	Particulars	Debit	Credit
1	Insurance expense Dr ($8,640*6/48)	$1,080.00
	To Prepaid insurance		$1,080.00
	(To record insurance expense)

2	Advertising expense Dr ($42,480*1/36)	$1,180.00
	To Prepaid advertising		$1,180.00
	(To record advertising expense)

ekkarill92 answered 2 years ago

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