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Question - For each separate case, record the necessary adjusting entry.
a. On July 1, Lopez Company paid $2,600 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31.
b. Zim Company has a Supplies account balance of $7,800 at the beginning of the year. During the year, it purchased $3,400 of supplies. As of December 31, a physical count of supplies shows $1,500 of supplies available.
Determine the year-end adjusting entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.
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