Question

1. prepare the adjusting journal entries needed at december 31. if an amount box does not require an entry, leave it blank. december 31 rent expense 2,250 prepaid rent 2,250 december 31 insurance expense 5,740 prepaid insurance 5,740 december 31 supplies expense 14099 supplies 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 $ balance in insurance expense $ balance in supplies $

Explanation:

Step1: Adjusting journal - entries concept

Adjusting entries are made to match revenues and expenses to the accounting period in which they occur. For prepaid items, when an expense is incurred, we reduce the prepaid asset.

Step2: Rent expense entry

The rent expense of $2,250 is recognized and the prepaid rent (an asset) is decreased by the same amount. So the adjusting entry is:
Debit Rent Expense $2,250; Credit Prepaid Rent $2,250.

Step3: Insurance expense entry

The insurance expense of $5,740 is recognized and the prepaid insurance (an asset) is decreased by $5,740. So the adjusting entry is:
Debit Insurance Expense $5,740; Credit Prepaid Insurance $5,740.

Step4: Supplies expense entry

Assuming the supplies used is $14,099, the adjusting entry is:
Debit Supplies Expense $14,099; Credit Supplies $14,099.

Step5: Effect on financial - statements if entries not made

Prepaid accounts (assets) were created when cash was paid. Adjusting entries affect expense and asset accounts. If not made, expenses would be under - stated, assets would be over - stated and net income would be over - stated.

Step6: Calculate account balances

For prepaid equipment rent, if the original prepaid amount was not given and only the expense of $2,250 is adjusted, we assume the balance after adjustment is the original amount minus $2,250. But since original amount is unknown, we can't calculate exactly. For insurance expense, after the adjustment of $5,740, the balance is $5,740. For supplies, if the original amount of supplies was $S$ and $14,099$ was used, the balance is $S - 14,099$. Assuming no other information about original amounts, we can't calculate exact non - zero balances for prepaid rent and supplies. But we know insurance expense balance is $5,740$.

Answer:

1.

Date	Account Title	Debit	Credit
	Prepaid Rent		$2,250$
Dec 31	Insurance Expense	$5,740$
	Prepaid Insurance		$5,740$
Dec 31	Supplies Expense	$14,099$
	Supplies		$14,099$

1. Prepaid asset; expense and asset; under - stated; over - stated; over - stated
2. Balance in prepaid equipment rent: Can't be determined with given information

Balance in insurance expense: $5,740$
Balance in supplies: Can't be determined with given information