Question

When the accounts of Buffalo Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 1. The prepaid insurance account shows a debit of $5,904, representing the cost of a 2-year fire insurance policy dated August 1 of the current year. 2. On November 1, Rent Revenue was credited for $1,719, representing revenue from a subrental for a 3-month period beginning on that date. 3. Purchase of advertising materials for $799 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $313 are on hand. 4. Interest of $802 has accrued on notes payable. Prepare the following in general journal form. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) (a) The adjusting entry for each item. No. Account Titles and Explanation Debit Credit 1. 2. 3. 4. (b) The reversing entry for each item where appropriate. No. Account Titles and Explanation Debit Credit 1. 2. 3. 4. Click if you would like to Show Work for this question: Open Show Work

Answer 1

No	Accounts	Debit	Credit
1(a)	Insurance expense	1230
	Prepaid Insurance		1230
	(5904*5/24)
1(b)	No reversing Entry
2(a)	Rental revenue (1719/3)	573
	Deferred rental revenue		573
2(b)	Deferred rental revenue	573
	Rental revenue		573
3(a)	Supplies	313
	Advertising expense		313
3(b)	Advertising expense	313
	Supplies		313
4(a)	Interest receivable	802
	Interest income		802