Adjusting for Deferrals

1. On October 1, 2019, a company prepays for 6 months of rent at $1,000 per month. Assume that the rental begins on October 1, 2018, that the company adjusts on a monthly basis, and a December 31, 2019 fiscal year end.
   1. Create a table that indicates the end-of-month balance in the prepaid rent account and the monthly expense from June 1, 2019 through June 1, 2020.

	1-Oct	31-Oct	30-Nov	31-Dec	31-Jan	28-Feb	31-Mar
Prepaid Rent	$1000
Monthly Rent Expense

2. What will the balance of the Prepaid Rent account be at the end of August? How about the end of November?

August: __________________

November: _______________

3. What will the Rent Expense be for the month ended December 31, 2019? What about the year ended December 31, 2019?

Month ended December 31, 2019: _______________

Year ended December 31, 2019: __________________

Failure to make an adjusting entry:

1. Describe the impact on a companys financial statements if its accountant fails to make an adjustment for $1,000 in accrued revenue.

2. Describe the impact on a companys financial statements if its accountant fails to make an adjustment for $1,000 in accrued expenses.

3. Describe the impact on a companys financial statements if its accountant fails to adjust for $1,000 in revenue associated with previously recorded unearned revenue.

4. Describe the impact on a companys financial statements if its accountant fails to adjust for $1,000 in expenses associated with a previously recorded prepaid expense.

5. Describe the impact on a companys financial statements if its accountant if it fails to adjust for $1,000 in depreciation expense.