S3-7. (Learning Objective 3: Adjusting prepaid expenses) Answer the following questions about prepaid expenses:

a. On March 1, Sunshine Travel prepaid $5,400 for six months’ rent. Provide the adjusting entry to record rent expense at March 31. Include the date of the entry and an explanation. Then post all amounts to the two accounts involved and show their balances at March 31. Sunshine Travel adjusts the accounts only at March 31, the end of its fiscal year.

b. On December 1, Sunshine Travel paid $980 for supplies. At March 31, Sunshine has

$750 of supplies on hand. Make the required journal entry at March 31. Then post all amounts to the accounts and show their balances at March 31.