How does the insurance adjustment affect prepaid insurance

Assignment Help Accounting Basics

Reference no: EM131958944

Question: 1. The trial balance of Neal Company as of January 31, 2019, after the company completed the first month of operations, is shown in the partial worksheet below.

Required: 2. Complete the worksheet by making the following adjustments: supplies on hand at the end of the month, $4,600; expired insurance, $5,700; depreciation expense for the period, $1,800.

Analyze: How does the insurance adjustment affect Prepaid Insurance

2. Paula Judge owns Judge Creative Designs. The trial balance of the firm for January 31, 2019, the first month of operations, is shown below.

End-of-the-month adjustments must account for the following items:

a. Supplies were purchased on January 1, 2019; inventory of supplies on January 31, 2019, is $600.

b. The prepaid advertising contract was signed on January 1, 2019, and covers a four-month period.

c. Rent of $1,100 expired during the month.

d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value.

Required: 1. Complete the worksheet for the month.

2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month.

3. Journalize and post the adjusting entries.

Analyze?If the adjusting entries had not been made for the month, would net income be overstated or understated?

Reference no: EM131958944

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