Question

ter 3 Exercise 3-48 (Algorithmic) Expense Adjustments Faraday Electronic Service repairs stereos and DVD players. During 2019, Faraday engaged in the following activities: On September 1, Feady paid Wausau Insurance $6,000 for its ability insurance for the next 12 months. The full amount of the prepayment was debited to prepaid insurance b. At December 31, wady estimates that $1.490 oftlity costs are recorded and road c. Faraday rents its testing equipment from JVC. Equipment rent in the amount of $3,300 is unpaid and unrecorded at December 31 d. In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television station. The station billed Faraday 14,500 for 3 month onesho-November 2019, December 2019, and Jeruary 2020-invece, when these aynents were made, Faraday debted prepaid advertising At December 31, 2 months advertising has been used and 1 month remains used Required ting pdf 1. Prepare adjusting entries December 31 for these four activities Dec 31 Insurance Expense Prepaid Insurance 96 Care (Record use of prepaid insurance) Dec.31 Utilities Expense Utilities Payable (Record use of utilities) Dec 31 Rent Expense lem

Answer 1

Date	General Journal	Debit	Credit
Dec. 31	Insurance expense	2,000
	Prepaid insurance		2,000
	( To record use of prepaid insurance)
Dec. 31	Utilities expense	1,490
	Utilities payable		1,490
	( To record use of utilities)
Dec. 31	Rent expense	3,300
	Prepaid rent		3,300
	( To record use of prepaid rent)
Dec. 31	Advertising expense	3,000
	Prepaid advertising		3,000
	( To record use of prepaid advertising)

a.

Insurance expense for 12 months = $6,000

Insurance expense for 4 months = 6,000 x 4/12

= $2,000

d.

Advertising expense for 3 months = $4,500

Advertising expense for 2 months = 4,500 x 2/3

= $3,000

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