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Effect of adjusting entries on the accounting equation
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Each of the following independent events requires a year end adjusting entry. Show how each event and its related adjusting entry affects the accounting equation. Assume a December 31 closing date. The first event is recorded as an example.a. Paid $4,800 cash in advance on October 1 for a one year insurance policy. b. Received an $3,600 cash advance for a contract to provide services in the future. The contract required a one year commitment, starting April 1. c. Purchased $1,200 of supplies on account. At year's end, $175 of supplies remained on hand. d. Paid $9,600 cash in advance on August 1 for a one year lease on office space.
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