2024 – E3 20B Adjusting and Reversing Entries When the accounts of David Nguyen Inc are examined the adjusting

E3-20B (Adjusting and Reversing Entries) When the accounts of David Nguyen Inc. are examined, the
adjusting data listed below are uncovered on December 31, the end of an annual fiscal period.
1. The prepaid insurance account shows a debit of $7,200, representing the cost of a 2-year fire insurance
policy dated August 1 of the current year.
2. On November 1, Rent Revenue was credited for $1,500, representing revenue from a subrental for
a 3-month period beginning on that date.
3. Purchase of advertising materials for $1,000 during the year was recorded in the Advertising Expense
account. On December 31, advertising materials of $300 are on hand.
4. Interest of $850 has accrued on notes payable.
Instructions
Prepare the following in general journal form.
(a) The adjusting entry for each item.
(b) The reversing entry for each item where appropriate.