Reference no: EM132973398
The following information was extracted from the accounting records of the business of Wendy's Lawnmowing Services. Account balances at 1 July 2018:
Rent accrued $3600 Rates prepaid 2400 Insurance prepaid 2400 Payments made during the year ended 30 June 2019 were as follows.
2018 Aug. 8 Rent, 4 months to 31 July 2018 $4800 Oct. 26 Insurance, 1 year to 31 October 2019 8400
Nov. 2 Rates, 6 months to 31 March 2019 5400
Dec. 12 Rent, 4 months to 30 November 2018 5200 2019
April 17 Rent, 4 months to 31 March 2019 5200
May 9 Rates, 6 months to 30 September 2019 5400
Assume that whenever cash was paid, the debit entry was made to the appropriate expense account, rather than the asset or liability, for the year. The only exception to this is the first payment for the year which is split between the accrual or deferral and the expense.
Required
Problem (a) Write up and balance the Rent Payable, Prepaid Rates, and Prepaid Insurance accounts in the ledger of Wendy's Lawnmowing Services for the year 1 July 2018 to 30 June 2019.
Problem (b) Show clearly any adjusting entries that may be required on 30 June 2019. Explain why these adjusting entries are necessary