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20162016.As of December 31, only two months' prepayment has expired, leaving the remaining month(s) (threethree-month total prepayment less two months expired) of insurance still prepaid. At December 31, 20162016, the company must transfer the unexpired portion of the original prepayment from the expense account to the prepaid asset account. From our computations in Requirement 2, we know that the company incurred $ 2 comma 000$2,000 of insurance expense related to this transaction through December 31, 20162016. Thus $ 1 comma 000$1,000 (= $ 3 comma 000$3,000 - $ 2 comma 000$2,000) should not be included in expenses, but rather should be recorded as an asset as of December 31, 20162016. To record this entry, we must increase Prepaid Insurance and reduce Insurance Expense by $ 1 comma 000$1,000.Save Accounting Table... +Copy to Clipboard...+DateAccounts and ExplanationDebitCreditDec. 31Prepaid Insurance1,000
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$ 5 comma 000$5,000 - $ 1 comma 000$1,000) must be shifted from the Service Revenue account to the Unearned Revenue account.
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Revenue, Prepaid rent, Generally Accepted Accounting Principles, Double-entry bookkeeping system, Service Revenue, Accounting Table