Question P3-47: Assessing Financial Statement Effect of Transactions and Adjustments Across Two Periods

Sloan Company has the following account balances at December 31, the end of its fiscal year (all accounts have normal balances).

Prepaid Advertising	$1,200	Unearned Service Fees	$5,400
Wages Expense	$43,800	Service Fees Earned	$87,000
Prepaid Insurance	$3,420	Rental Income	$4,900

1. Prepare Sloan Companys accounting adjustments at December 31 using the financial statement effects template and the following additional information.
   1. Prepaid advertising at December 31 is $800
   2. Unpaid wages earned by employees in December are $2,600
   3. Prepaid insurance at December 31 is $2,280
   4. Unearned service fees at December 31 are $3,000
   5. Rent revenue of $1,000 owed by a tenant is not recorded at December 31
2. Use the financial statement effects template to record the following transactions on January 4 of the following year:
   1. Payment of $4,800 cash in wages
   2. Cash receipt from the tenant of the $1,000 rent revenue