When the accounts of Sheffield Inc. are examined, the adjusting data listed belo

Question

When the accounts of Sheffield Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period.

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

(b) The reversing entry for each item where appropriate.

No.

Account Titles and Explanation

Debit

Credit

1. The prepaid insurance account shows a debit of $3,840, 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 $1,683, representing revenue from a subrental for a 3-month period beginning on that date. 3. Purchase of advertising materials for $826 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $289 are on hand. 4. Interest of $809 has accrued on notes payable.

Explanation / Answer

(a).

No.

Accounts Title & Explanation

Debit

Credit

1.

Insurance Expense ($3840 * 5 / 24)

$800

      Prepaid Insurance

$800

(For recording expired insurance)

2.

Rent Revenue ($1683 * 1 / 3)

$561

      Rent Receivable

$561

(For recording expired rent revenue)

3.

Advertising Materials Expense

$537

      Advertising Materials ($826 – $289)

$573

(For recording used advertising materials used)

4.

Interest Expense

$809

      Interest Payable

$809

(For recording interest expense)

(b).

No.

Accounts Title & Explanation

Debit

Credit

1.

(No revising entry is required)

$0

$0

2.

Rent Receivable

$561

      Rent Revenue

$561

(Revising entry for expired rent)

3.

Advertising Materials

$289

      Advertising Materials Expense

$289

(Revising entry for materials on hand)

4.

(No revising entry is required)

$0

$0

No.

Accounts Title & Explanation

Debit

Credit

1.

Insurance Expense ($3840 * 5 / 24)

$800

      Prepaid Insurance

$800

(For recording expired insurance)

2.

Rent Revenue ($1683 * 1 / 3)

$561

      Rent Receivable

$561

(For recording expired rent revenue)

3.

Advertising Materials Expense

$537

      Advertising Materials ($826 – $289)

$573

(For recording used advertising materials used)

4.

Interest Expense

$809

      Interest Payable

$809

(For recording interest expense)

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