The following information was extracted from the accounting records of the business of Wendy’s Lawnmowing Services:

Account balances at 1 July 2015: Rent accrued Rates prepaid Insurance prepaid

$3600 2400 2400

Payments made during the year ended 30 June 2016 were as follows:

2015 Aug. Oct. Nov. Dec. 2016 April May

8 26 2 12 17 9

Rent, 4 months to 31 July 2015 Insurance, 1 year to 31 October 2016 Rates, 6 months to 31 March 2016 Rent, 4 months to 30 November 2015 Rent, 4 months to 31 March 2016 Rates, 6 months to 30 September 2016

$4800 8400 5400 5200 5200 5400

Assume that whenever cash was paid, the debit entry was made to the appropriate expense account, rather than the asset or liability, for the year. The only exception to this is the first payment for the year which is split between the accrual or deferral and the expense.

Required

A. Write up and balance the Rent Payable, Prepaid Rates, and Prepaid Insurance accounts in the ledger of Wendy’s Lawnmowing Services for the year 1 July 2015 to 30 June 2016.

B. Show clearly any adjusting entries that may be required on 30 June 2016. Explain why these adjusting entries are necessary.