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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

ADJUSTMENT FOR INSURANCE On December 1, a six-month liability insurance policy was purchased for $900. Analyze the required adjustment as of December 31 using T accounts, and then formally enter this adjustment in the general journal.

To determine

Analyze the required adjustment as of December 31 using T accounts and prepare journal entry to formally enter the given adjustment.

Explanation

Adjusting entries:

Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Analyze the given adjustment using T-account.

Prepare journal entry to record the given adjustment.

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