Question

Listed below is information related to several adjusting entry situations. Assume that the accounting year ends on December 31.

1.	$3,000 paid for insurance on October 1 for a one-year period (October 1 - September 30). This transaction was recorded as a debit to prepaid insurance ($3,000) and a credit to cash ($3,000).
2.	Interest on bonds payable in the amount of $500 has not been recorded at December 31.
3.	Rent expense in the amount of $1,200 was paid on November 1. This transaction was recorded as a debit to rent expense ($1,200) and a credit to cash ($1,200). This rent payment was for the period November 1 to January 31

Required:

Record the original entries and the adjusting entries using T-accounts (or, as it is very difficult to align the T-account on any direct post here, you can use double-entry system accounts).

Answer 1

        Prepaid insurance

Date	Accounts	Amount	Date	Accounts	Amount
1-Oct	To cash	3000	31 Dec	insurance expense [$3000/ 12 * 3]	750

      Cash

Date	Accounts	Amount	Date	Accounts	Amount
			1-Oct	By prepaid insurance	3000
			1 Nov	By prepaid rent	1200

Insurance expense

Date	Accounts	Amount	Date	Accounts	Amount
31 Dec	To prepaid insurance	750

Interest payable

Date	Accounts	Amount	Date	Accounts	Amount
			31 Dec	By interest expense	500

Interest expense

Date	Accounts	Amount	Date	Accounts	Amount
31 Dec	To interest payable	500

Rent expense

Date	Accounts	Amount	Date	Accounts	Amount
1 Nov	To cash	1200	31 Dec	By Prepaid rent[1200/ 3 * 1]	400

Prepaid rent

Date	Accounts	Amount	Date	Accounts	Amount
1 Nov	To Rent expense	400