Recording Adjusting Entries (Deferred Accounts)

In each of the following transactions (a) through (c) for Romneys Marketing Company, use the three step process illustrated in the chapter to record the adjusting entry at the year-end Dec 31, 2015. The process includes (1) determining if revenue was earned or an expense 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.

Collected $1,200 rent for the period of December 1, 2015, to April 1, 2016, which was credited to Unearned Rent Revenue on December 1, 2015.

Purchased a machine for $32, 000 cash in January 1, 2011. The company estimates annual depreciation at $3,200.

Paid $5000 for a two-year insurance premium on July 1, 2015: debited Prepaid Insurance for that amount.