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Problem - Service Pro Corp. (SPC) is preparing adjustments for its September 30 year-end. For the following transactions and events, show the September 30 adjusting entries SPC would make.
a. Prepaid Insurance shows a balance of zero at September 30, but Insurance Expense shows a debit balance of $2,232, representing the cost of a three-year fire insurance policy that was purchased on September 1 of the current year.
b. On August 31 of this year, Cash was debited and Service Revenue was credited for $1,410. The $1,410 related to fees for a three- month period beginning September 1 of the current year.
c. The company's income tax rate is 39%. After making the above adjustments, SPC's net income before tax is $10,000. No income tax has been paid or recorded.
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