Willow Window Washing Services prepares adjustments monthly and shows the following selected accounts on its December 31, 2020, unadjusted trial balance:

Required

Prepare the required monthly adjusting entries at December 31, 2020, based on the following additional information:

a. The remaining balance in Prepaid Insurance was for a six-month insurance policy purchased for $7,440 and in effect on September 1, 2020.

b. $5,200 of the balance in Prepaid Office Rent had not been used as at December 31, 2020.

c. $1,140 of the balance in Prepaid Subscriptions had been used as at December 31, 2020.

d. The company paid $33,840 on April 1, 2020, to rent equipment for a three-year period beginning April 1, 2020.

Analysis Component: If the above adjustments were not recorded, identify the types of accounts that would be affected and if they would be over- or understated.

Transcribed Image Text:

Account Debit Credit $ 3,720 23,000 1,300 26,320 Prepaid insurance. Prepaid office rent. Prepaid subscriptions. Prepaid equipment rental