Fill in the t-accounts for each situation and label each transaction as Deferrals/Prepaid or Accrual. Calculate the adjusted balance and use a Bal. post reference to show the ending balance of each account.1.Completed services that were paid for six months earlier, $970. The Service Revenue unadjusted balance as of December 31 is $9,100. The Unearned Revenue balance as of December 31 is $8,100.2. Incurred interest expense of $2,900.3.A two year insurance policy for $1,320 was purchased on November 1 of the current year. Record the transaction for the year ended December 31.

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Asked Dec 11, 2019
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Fill in the t-accounts for each situation and label each transaction as Deferrals/Prepaid or Accrual. Calculate the adjusted balance and use a Bal. post reference to show the ending balance of each account.

1.

Completed services that were paid for six months earlier, $970. The Service Revenue unadjusted balance as of December 31 is $9,100. The Unearned Revenue balance as of December 31 is $8,100.

2. Incurred interest expense of $2,900.

3.

A two year insurance policy for $1,320 was purchased on November 1 of the current year. Record the transaction for the year ended December 31.
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Expert Answer

Step 1

We shall first prepare the journal entries for all the transactions given in question-

Please see below step for the same.

Step 2

Attached are the journals for all the three transactions.

Please refer the working of insurance expense to see how the amount of $  110 is calculated. 

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Amnt in $ PR Particulars 31-Dec Debit Unearned revenue a/c |Credit Service revenue a/c |(adjusting the service revenue received six months earlier) Debit Credit Date 970 GJ1 970 GJ1 31-Dec Debit Interest expense a/c |Credit accrued interest a/c |(recording the interest payable) GJ2 2900 GJ2 2900 31-Dec Debit Insurance expenses a/c |Credit Prepaid insurance a/c |(adjusting the insurance expense of current year out of prepaid amount) 110 GJ3 GJ3 110 Working for insurance expenses Insurance policy purchased on Nov for $ 1320 for two years therefore , insurnace is for 24 months insurance expense per month = 1320/24 $ 55 per month To record the insurance expesne for two months =$55 x 2= $110

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Step 3

Now we shall prepare the T accounts as required in the question using the journals prepared in the ste...

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Unearmed reven ue afs Debit (in $) Date Credit (in S) Date Particular Particulars PR Adjusting entry- service revenue now Dec-31 earned Dec-31opening baiance b/t GJI 970 Dec 31Cocing Ralance c/t 7130 S100 service revenuo Debit (in s) Date credit (in S) PR Date Particulars Particulars PR Dec-31opening talance b/t Adjusting entry-anearned service revenue now esrned 270 Dec 31 Teretained earnings or P/La/k 10070 Acruel interest Date Particulars Debit (in S Date Credit (in S) Particulars PR Adjusting entry- interost Dec-3sexpense acerued for the year Dec-31 Closing Dalance s/t 2900 2900 Bnterest expense Debit (in S) ate credit (in S) Particalars Particulars by retained earnings/ or P/L Adjusting entry for interest incurred for Dee a the year Dec-11arenunt G12 2900 Prepaid insurance Debit (in SI Date PR Credit (in S) Particulars adjusting entry- Insurance expense for two monthstnov- Date Particulars PR Nov-o1 To cesh a/c 1320 Dec-31 dec to be expensed) 110 GJ3 Dec-11 Closing Balance et 1210 1320 1320 Insurance exp ense Credit (in S) Debit (in $) Date Date Particulars Particulars Adjustingentry- Prepaid ansurance hy retained earnings or P/ Dec-31expensed for two months Dec-31 account 110

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