Calculate the year-end adjusted balance of insurance expense

Reference no: EM131519722

Question: 1. Suppose Hoosiers, a specialty clothing store, rents space at a local mall for one year, paying $19,200 ($1,600/month) in advance on October 1.

(1) Record the purchase of rent in advance on October 1.

(2) Record the adjusting entry on December 31.

(3) Calculate the year-end adjusted balances of prepaid rent and rent expense (assuming the balance of Prepaid Rent at the beginning of the year is $0).

2. Mountaineer Excavation operates in a low-lying area that is subject to heavy rains and flooding. Because of this, Mountaineer purchases one year of flood insurance in advance on March 1, paying $30,000 ($2,500/month).

(1) Record the purchase of insurance in advance on March 1.

(2) Record the adjusting entry on December 31.

(3) Calculate the year-end adjusted balances of Prepaid Insurance and Insurance Expense (assuming the balance of Prepaid Insurance at the beginning of the year is $0).

Reference no: EM131519722

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