Jenning Co.
Jenning Co.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
$\begin{array}{lr}
&\text { Debit }&\text {Credit }\
\text { Cash } & \$ 12,920 \
\text { Accounts Receivable } & 9,620 \
\text { Supplies } & 1,400 \
\text { Prepaid Insurance } & 3,120 \
\text { Equipment } & 26,000\
\text { Accumulated Depreciation-Equipment } && \$ 10,400 \
\text { Unearned Service Revenue } && 6,500 \
\text { Capital Stock } && 7,190 \
\text { Retained Earnings } && 23,500\
\text { Dividends } & 1,560 \
\text { Service Revenue } &&16,510 \
\text { Wages and Salaries Expense } & 7,800 \
\text { Utilities Expense } & 380 \
\text { Rent Expense } & \underline{1,300} \
& \underline{\$ 64,100}& \underline{\$64,000} \
\end{array}$
-Refer to the trial balance of Jenning Co. On July 1,Jenning paid four months in advance for an insurance.Assume that the balance in the Prepaid Insurance account includes only this payment.Which of the following is included in the adjusting entry at July 31?

Question

Jenning Co.
Jenning Co.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
 $\begin{array}{lr}
&\text { Debit }&\text {Credit }\
\text { Cash } & \$ 12,920 \
\text { Accounts Receivable } & 9,620 \
\text { Supplies } & 1,400 \
\text { Prepaid Insurance } & 3,120 \
\text { Equipment } & 26,000\
\text { Accumulated Depreciation-Equipment } && \$ 10,400 \
\text { Unearned Service Revenue } && 6,500 \
\text { Capital Stock } && 7,190 \
\text { Retained Earnings } && 23,500\
\text { Dividends } & 1,560 \
\text { Service Revenue } &&16,510 \
\text { Wages and Salaries Expense } & 7,800 \
\text { Utilities Expense } & 380 \
\text { Rent Expense } & \underline{1,300} \
&  \underline{\$ 64,100}& \underline{\$64,000} \
\end{array}$
-Refer to the trial balance of Jenning Co. On July 1,Jenning paid four months in advance for an insurance.Assume that the balance in the Prepaid Insurance account includes only this payment.Which of the following is included in the adjusting entry at July 31?

Quizplus · Accepted Answer

The correct adjusting entry at July 31 would include a credit to Prepaid Insurance for $780, representing one month's worth of the insurance expense (since the payment covered four months, one month has now been used).

Jenning Co -Refer to the Trial Balance of Jenning Co