a.

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 only the adjusting entry at the end of the current year. The process includes (1) determining if revenue was earned or an expense was 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Collected $1,200 rent for the period December 1 of the current year to April 1 of next year, which was credited to Unearned Rent Revenue on December 1.

Purchased a machine for $32,000 cash on January 1. The company estimates annual depreciation at $3,200.

Paid $5,000 for a two-year insurance premium on July 1 of the current year; debited Prepaid Insurance for that amount.

b.

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 the end of the current year. The process includes (1) determining if revenue was earned or an expense was 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Estimated electricity usage at $450 for December; to be paid in January of next year.

On September 1 of the current year, loaned $6,000 to an officer who will repay the loan principal and interest in one year at an annual interest rate of 14 percent.

Owed wages to 10 employees who worked four days at $200 each per day at the end of the current year. The company will pay employees at the end of the first week of next year.

c.

Diane Company completed its first year of operations on December 31. All of the year's entries have been recorded except for the following:

a. At year-end, employees earned wages of $4,000, which will be paid on the next payroll date in January of next year.

b. At year-end, the company had earned interest revenue of $1,500. The cash will be collected March 1 of next year.

Aubrae Company is making adjusting entries for the year ended December 31 of the current year. In developing information for the adjusting entries, the accountant learned the following:

a. A two-year insurance premium of $4,800 was paid on October 1 of the current year for coverage beginning on that date. The bookkeeper debited the full amount to Prepaid Insurance on October 1.

b. At December 31 of the current year, the following data relating to Shipping Supplies were obtained from the records and supporting documents.

Shipping supplies on hand, January 1 of the current year	$	13,000
Purchases of shipping supplies during the current year		75,000
Shipping supplies on hand, counted on December 31 of the current year		20,000

Required:

For each of the transactions in Diane Company and Aubrae Company, indicate the amount and the direction of effects of the adjusting entry on the elements of the balance sheet and income statement. Using the table below, indicate + for increase and - for decrease.

Journal entry worksheet 2 Record the adjusting journal entry for year-end December 31 of the current year related to rent Note: Enter debits before credits. Transaction General Journal Debit Credit a