For each of the following situations, determine the necessary adjustments.
1. A firm purchased a three-year insurance policy for $27,000 on July 1, 20X1. The $27,000 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance on the firm’s July 31, 20X1, worksheet?
2. On December 1, 20X1, a firm signed a contract with a local radio station for advertising that will extend over a two-year period. The firm paid $72,000 in advance and debited the amount to Prepaid Advertising. What adjustment should be made to record expired advertising on the firm’s December 31, 20X1, worksheet?