🎯 Practical Case: Year-End Adjustments
Your Mission
It's December 31, and "MediaMax Agency" needs year-end adjusting entries. Identify what needs adjustment and prepare the entries!
Scenario: Identify & Record Adjustments
Review the following situations and prepare the necessary adjusting entries.
Situation 1: Prepaid Insurance
On July 1, the company paid $1,200 for a 12-month insurance policy. No adjustments have been made.
Situation 2: Accrued Salaries
Employees earn $500 per day. The last payday was Friday, Dec 27. Dec 31 is a Tuesday.
Situation 3: Unearned Revenue
On Nov 1, received $3,000 for 6 months of services in advance. By Dec 31, how much has been earned?
Summary: Complete Adjusting Journal
Record all three adjusting entries in the journal below.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Dec 31 | Insurance Expense | ||
| Prepaid Insurance | |||
| Dec 31 | Salaries Expense | ||
| Salaries Payable | |||
| Dec 31 | Unearned Revenue | ||
| Service Revenue |
🎉 Great Job!
You've mastered adjusting entries! These ensure revenues and expenses are recorded in the correct period.