B-03.04 Problem

B-03.04 Problem - (2 The company started 20X3 with $20,000...

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B-03.04 Following are three separate transactions that pertain to prepaid items. Evaluate each item and prepare the journal entries that would be needed for the initial recording and subsequent end-of-20X3 adjusting entry. Assume the company uses the balance sheet approach, and the initial recording is to an asset account. The company has a calendar year-end and does not make any adjusting entries prior to December 31. (1) The company purchased an 18-month insurance policy for $18,000 on June 1, 20X3.
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Unformatted text preview: (2) The company started 20X3 with $20,000 in supplies (this was previously recorded, and you do not need to make an entry for the beginning balance), purchased $30,000 in supplies during the year, and found only $13,000 in supplies on hand at the end of 20X3. (3) The company paid $2,500 to rent a truck. The rental period began on December 16, 20X3, and ends on February 14, 20X4....
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