The following selected accounts appeared in the unadjusted trial balance of Help Industries:
- Accounts receivable $176,000
- Prepaid rent $69,000
- Prepaid insurance $36,000
- Equipment $280,000
- Accumulated depreciation-equipment $30,000
- Unearned service revenue $24,000
Salary expense $130,000
- One-half of the revenue received in advance has been earned by December 31, 2007.
- The prepaid insurance represents three years’ premium on a policy providing coverage starting September 1, 2007.
- Since the last payday, employees have earned an additional $2,500, which has not yet been paid or recorded.
- The equipment has an estimated life of 10 years and no expected value at the end of its life.
- Services performed but unbilled and uncollected at year end amount to $6,500.
- The prepaid rent relates to one-half of a year beginning on October 1, 2007.
Prepare the necessary year-end adjusting entries as of December 31, 2007.
The issue I'm having is specifically on "The prepaid rent relates to one-half of a year beginning on October 1, 2007" and "One-half of the revenue received in advance has been earned by December 31, 2007."