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225ch 4 solutions - E 427(LO2 1 Adjusting Entries Prepaid...

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E 4–27 (LO2) Adjusting Entries: Prepaid Expenses and Unearned Revenues 1. Original entry Prepaid Insurance ............................................................... 5,400 Cash ................................................................................. 5,400 Adjusting entry Insurance Expense .............................................................. 900 Prepaid Insurance .......................................................... 900 ($5,400/3 years = $1,800 per year; $1,800 year × 1/2 year = $900)
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E 4–27 (LO2) (Continued) 2. Original entry Prepaid Property Taxes ...................................................... 2,400 Cash ................................................................................. 2,400 Adjusting entry Property Tax Expense ......................................................... 2,200 Prepaid Property Taxes ................................................. 2,200 ($2,400/12 months = $200 per month; $200 × 11 months = $2,200) 3. Original entry Prepaid Subscriptions ........................................................ 360 Cash ................................................................................. 360 Adjusting entry Subscription Expense ......................................................... 80 Prepaid Subscriptions ................................................... 80 ($360/36 months = $10 per month; $10 × 8 months = $80) 4. Original entry Cash ...................................................................................... 3,600 Unearned Consulting Fees Revenue ........................... 3,600 Adjusting entry Unearned Consulting Fees Revenue ................................. 700 Consulting Fees Revenue ............................................. 700 ($3,600/18 months = $200 per month; $200 per month × 3 1/2 months = $700) 5. Original entry Cash ...................................................................................... 900 Unearned Rent Revenue ............................................... 900 Adjusting entry Unearned Rent Revenue ..................................................... 300 Rent Revenue ................................................................. 300 ($900/6 months = $150 per month; $150 × 2 months = $300)
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E 4–27 (LO2) (Concluded) 6. Original entry Cash ...................................................................................... 14,400 Unearned Interest Revenue ..........................................
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