(Learning Objective 3: Adjusting prepaid expenses) Answer the following questions about prepaid expenses:
a. On November 1, Air & Sea Travel prepaid $3,000 for 6 months’ rent. Give the adjusting entry to record rent expense at December 31. Include the date of the entry and an explanation. Then post all amounts to the 2 accounts involved, and show their balances at December 31. Air & Sea Travel adjusts the accounts only at December 31.
b. On Dec. 1, Air & Sea Travel paid $800 for supplies. At December 31, Air & Sea Travel has $500 of supplies on hand. Make the required journal entry at December 31. Then post all amounts to the accounts and show their balances at December 31.