Midwest Manufacturing purchased a three-year insurance policy for $34,500 on January 2, 2009. Assume the January 2, 2009, balances in T-accounts for prepaid insurance, insurance expense, cash, and retained earnings were $0, $0, $93,200, and $84,700, respectively.

Midwest Manufacturing purchased a three-year insurance policy for $34,500 on January 2, 2009. Assume the January 2, 2009, balances in T-accounts for prepaid insurance, insurance expense, cash, and retained earnings were $0, $0, $93,200, and $84,700, respectively.

Required:

(a)	Prepare journal entries, adjusting journal entries, and closing journal entries required on January 2, 2009, December 31, 2009, and December 31, 2010. (Omit the "$" sign in your response.)

	Date	General Journal	Debit	Credit
a	1/2/09	Prepaid insurance
	JE	Cash
b	12/31/09	Insurance expense
	AJE	Prepaid insurance
c	12/31/09	Retained earnings
	CJE	Insurance expense
d	12/31/10	Insurance expense
	AJE	Prepaid insurance
e	12/31/10	Retained earnings
	CJE	Insurance expense

 

(b)	Summarize the above entries in T-accounts for Prepaid insurance, Insurance expense, Cash, and Retained earnings. (Record the transactions in the given order. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

 

Prepaid Insurance

1/2/09	0
a				b
12/31/09
				d
12/31/10

 

Insurance  Expense

1/2/09	0
b				c
12/31/09
d				e
12/31/10

 

Cash

1/2/09	93,200
				a
12/31/09
12/31/10

 

Retained Earnings

			84,700	1/2/09
c
				12/31/09
e
				12/31/10

 

(c)	Given only the entries for insurance, indicate what amounts would be reported for each of these accounts on the balance sheet and income statement prepared on December 31, 2009, and December 31, 2010. (Omit the "$" sign in your response.)

	12/31/2009	12/31/2010
Balance sheet:
Assets
Cash	$	$
Prepaid insurance
Stockholders equity
Retained earnings
Income statement:
Insurance expense	$	$