Reed Co. wishes to enter receipts and payments in such a manner that adjustments

Question

Reed Co. wishes to enter receipts and payments in such a manner that adjustments at the end of the period will not require reversing entries at the beginning of the next period. Record the following transactions in the indicated manner and give the adjusting entry on December 31, 2014. (Two entries for each part.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) An insurance policy for two years was acquired on April 1, 2014 for $16,584. Rent of $12,300 for six months for a portion of the building was received on November 1, 2014.

Explanation / Answer

1 DR CR Insurance Prepaid 16584 Cash 16584 Insurance expense 16584*9/24 6219 Insurance Prepaid 6219 DR CR 2 Cash 12300 Unearned rental revenue 12300 Unearned rental revenue 4100 Rent Revenue 12300*2/6 4100

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