Question

At the end of 2014, Drew Company made four adjusting entries for the following items:

1. Depreciation expense, $25,000.
2. Expired insurance, $2,200 (originally recorded as prepaid insurance.)
3. Interest payable, $6,000.
4. Rent receivable, $10,000.
In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be reversed is (are)"

Answer 1

The adjusting entry or entries that may be reversed in a normal situation are the ones that are not permanent in nature, such as depreciation expense, expired insurance, and interest payable.

Step-by-step explanation:

The adjusting entry or entries that may be reversed in a normal situation are the ones that are not permanent in nature. In this case, the first three adjusting entries (depreciation expense, expired insurance, and interest payable) are all temporary in nature and can be reversed. The fourth entry (rent receivable) is a balance sheet account and should not be reversed.