Best Company had the following items that require adjustment at year end.

1. Cash for equipment rental in the amount of $3,800 was paid in advance. The $3,800 was debited to prepaid rent when paid. At year end, $2,950 of the prepaid rent had expired.
2. Cash for insurance in the amount of $8,200 was paid in advance. The $8,200 was debited to prepaid insurance when paid. At year end, $1,850 of the prepaid insurance was still unused.
3. Supplies at the beginning of the year showed a balance of $2,000. Best purchased supplies of $16,200 during the year. At the end of the year, a physical count of supplies showed $4,125 of supplies on hand.

Required:

1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank.

Dec. 31	Rent Expense	fill in the blank 27781a0e1020040_2	fill in the blank 27781a0e1020040_3
	Prepaid Rent	fill in the blank 27781a0e1020040_5	fill in the blank 27781a0e1020040_6
Dec. 31	Insurance Expense	fill in the blank 27781a0e1020040_8	fill in the blank 27781a0e1020040_9
	Prepaid Insurance	fill in the blank 27781a0e1020040_11	fill in the blank 27781a0e1020040_12
Dec. 31	Insurance Expense	fill in the blank 27781a0e1020040_14	fill in the blank 27781a0e1020040_15
	Insurance Revenue	fill in the blank 27781a0e1020040_17	fill in the blank 27781a0e1020040_18

2. What is the effect on the financial statements if these adjusting entries are not made?

In all these cases, was originally created when cash was paid. The adjusting entries will affect account. If these entries were not made, expenses would be and assets would be . In addition, net income will be .

3. What is the balance in prepaid equipment rent, insurance expense, and supplies at December 31?

Balance in prepaid equipment rent	$fill in the blank 03aa370aff8806d_1
Balance in insurance expense	$fill in the blank 03aa370aff8806d_2
Balance in supplies	$fill in the blank 03aa370aff8806d_3