In each of the following transactions (a) through (c) for Romney's Marketing Company, use the three-step process illustrated in the chapter to record the adjusting entry at year-end December 31, 2018. The process includes (1) determining if revenue was earned or an expense incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment.
a. Collected $1,200 rent for the period December 1, 2018, to April 1, 2019, which was credited to deferred rent revenue on December 1, 2018.
b. Purchased a machine for $32,000 cash on January 1, 2014. The company estimates annual depreciation for the year 2018 at $3,200.
c. Paid $5,000 for a two-year insurance premium on July 1, 2018; debited prepaid insurance for that amount.