Answer:
1.-
insurance expense 1,020 debit
prepaid insurance 1,020 credit
2.-
rent revenue 1,650 debit
cash 1,650 credit
cash 1,650 debit
unearned revenue 1,650 credit
unearned revenue 1,100 debit
rent revenue 1,100 credit
3.-
advertizing expense 535 debit
advertizing supplies 535 credit
4.-
interest expense 802 debit
interest payable 802 credit
Explanation:
2-years of 4,896 AKA 24 months
months outstanding during the year: August 1st to December 31th: 5 months
4,896 x 5/24 = 1,020
purchases of advertising materials 801
materials on hand at year-end <u> (266) </u>
advertising expense 535
we must reverse the entry as the rent revenue wasn't accrued yet we have unearned revenue and at year-end we adjust for the earned protion which is 2 months: 1,650 x 2/3 = 1,100
as the inerest are accrued it means we aren't paying them at year-end
