In each of the following transactions (a) through (c) for Romney\'s Marketing Co

Question

In each of the following transactions (a) through (c) for Romney's Marketing Company, use the three-step process illustrated in the chapter to record the adjusting entry at the end of the current year. Indicate the amounts and direction of effects of the adjusting entry on the elements of the balance sheet and income statement. Indicate + for increase,-for decrease. a. Collected $3,600 rent for the period December 1 of the current year to April 1 of next year, which was credited to Unearned Rent Revenue on December 1. b. Purchased a machine for $34,000 cash on January 1. The company estimates annual depreciation at $4,900 c. Paid $2,700 for a two-year insurance premium on July 1 of the current year, debited Prepaid Insurance for that amount Balance Sheet Income Statement Transaction Assets Liabilities Stockholders Revenues Expenses Net Income Equity a. b. C.

Explanation / Answer

To record adjusting entry :

Balance sheet Income statement Transaction Assets Liabilities Stockholder's equity Revenues Expenses Net income a. -900 +900 +900 +900 b. -4900 -4900 +4900 -4900 c. -675 -675 +675 -675

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