Question

Adjusting entries affect at least one balance sheet account and at least one income statement account.

For the entries below, identify the account to be debited and the account to be credited from the following

accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated

Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;

Depreciation Expense. Indicate which of the accounts is the income statement account and which is

the balance sheet account.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

c. Entry to record revenue earned but not yet billed (nor recorded).

d. Entry to record expiration of prepaid insurance.

e. Entry to record annual depreciation expense.

Short answer

Answer:

The insurance expense account is debited and prepaid insurance expense account is credited.

Step-by-step solution

Definition of prepaid insurance

When the amount of insurance is paid before the due date, this amount is known as prepaid insurance.

Adjusting entry for the expiration of prepaid insurance

	Journal entry
Date	Particulars	Debit	Credit
	Insurance Expense	$
	Prepaid Insurance		$
	(Adjustment entry)