Question

Prepare the adjusting entry for following items on December 31of the current year.

1. The prepaid insurance account shows a debit of $6,000,representing the cost of a 2-year casualty insurance policy datedSeptember 1 of the current year.

2. On November 1, Rent Revenue was credited for $2,400,representing revenue from a subrental for a 3-month periodbeginning on that date.

3. Purchase of advertising supplies for $800 during the year wasrecorded in the Advertising Expense account. On December 31,advertising supplies of $290 are on hand.

4. Interest of $770 has accrued on notes payable.