A review of the accounts of Tucker and Wu Pan Accountants reflected the following transactions, which may or may not require adjustment at the year ended December 31, 2014.
1. The Prepaid Rent account shows a debit of $7,200 paid October 1, 2014, for a one-year lease that started on that day. The payment was for the last month's rent plus five months' rent starting on October 1, 2014.
2. On November 1, 2014, Services Revenue was credited $2,400 for an amount paid by a client for audit services to be performed in January.
3. On June 1, 2014, a cheque in the amount of$6,000 was issued for a two-year subscription to a trade publication starting on June 1, 2014. The amount was charged to Operating Expenses.
4. Interest of$1,270 has accrued on notes payable.
Instructions
Prepare
(a) The adjusting entry for each item and
(b) The reversing entry for each item, where appropriate.