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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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At the end of 2019, Jayrad Company paid $6,000 for insurance coverage for 2020. It recorded this by debiting Insurance Expense and crediting Cash, hut failed to record a year-end adjustment. Upon discovery of this error at the end of 2020, what correcting journal entry will Jayrad Company make? Ignore income taxes.

To determine

Prepare the correcting journal entry for Company J in 2020.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare the correcting journal entry for Company J in 2020.

DateAccount Titles and ExplanationPost Ref...

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