Gomez Company had the following transactions in the last two months of its year ended December 31. November 1 Paid $2,000 cash for future advertising. November 1 Paid $3,000 cash for 12 months of insurance through October 31 of the next year. November 30 Received $7,600 cash for future services to be provided to a customer. December 1 Paid $4,800 cash for consulting to be received over the next eight months. December 15 Received 58,250 cash for future services to be provided to a customer. December 31 of the advertising paid for on November 1, $1,150 worth is not yet used. December 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid Insurance. December 31 Services worth $1,000 are not yet provided to the customer who paid on November 30. December 31 One-eighth of the consulting paid for on December 1 has been received. December 31 The company has performed $3,100 of services that the customer paid for on December 15. Required: 1. Prepare entries for these transactions under the method that initially records prepaid expenses as assets and records unearned revenues as liabilities. Also prepare adjusting entries at the end of the year. 2. Prepare entries for these transactions under the method that initially records prepaid expenses as expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year.
Gomez Company had the following transactions in the last two months of its year ended December 31. November 1 Paid $2,000 cash for future advertising. November 1 Paid $3,000 cash for 12 months of insurance through October 31 of the next year. November 30 Received $7,600 cash for future services to be provided to a customer. December 1 Paid $4,800 cash for consulting to be received over the next eight months. December 15 Received 58,250 cash for future services to be provided to a customer. December 31 of the advertising paid for on November 1, $1,150 worth is not yet used. December 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid Insurance. December 31 Services worth $1,000 are not yet provided to the customer who paid on November 30. December 31 One-eighth of the consulting paid for on December 1 has been received. December 31 The company has performed $3,100 of services that the customer paid for on December 15. Required: 1. Prepare entries for these transactions under the method that initially records prepaid expenses as assets and records unearned revenues as liabilities. Also prepare adjusting entries at the end of the year. 2. Prepare entries for these transactions under the method that initially records prepaid expenses as expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question
Transcribed Image Text:<
1
2
Date
December
31
Note: Enter debits before credits.
3
Record entry
4
Date
December
31
5
Of the advertising paid for on November 1, $1,150 worth is not yet used.
Note: Enter debits before credits.
General Journal
Journal entry worksheet
< 1 2 3 4 5
Clear entry
6
General Journal
7
6
8
7
Debit
8
9
One-eighth of the consulting paid for on December 1 has been received.
Debit
9
10
Credit
View general Journal
10
Credit
>
>
<1
2
Date
December
31
Note: Enter debits before credits.
3
Record entry
4
Date
December
31
5
A portion of the insurance paid for on November 1 has expired. No adjustment
was made in November to Prepaid Insurance.
General Journal
Note: Enter debits before credits.
Journal entry worksheet
< 1 2 3 4 5
Clear entry
6
General Journal
7 8
6
7
9
Debit
10
Credit
The company has performed $3,100 of services that the customer paid for on
December 15.
View general Journal
8 9 10
Debit Credit
>
<1 2
3
Note: Enter debits before credits.
Date
December
31
Record entry
4
5
Services worth $1,000 are not yet provided to the customer who paid on
November 30.
General Journal
6
Clear entry
7
8
9 10
Debit
Credit
View general J
Transcribed Image Text:Gomez Company had the following transactions in the last two months of its year ended December 31.
November 1 Paid $2,000 cash for future advertising.
November 1 Paid $3,000 cash for 12 months of insurance through October 31 of the next year.
November 30 Received $7,600 cash for future services to be provided to a customer.
December 1 Paid $4,800 cash for consulting to be received over the next eight months
December 15 Received $8,250 cash for future services to be provided to a customer.
December 31 of the advertising paid for on November 1, $1,150 worth is not yet used.
December 31 A portion of the Insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid
Insurance.
December 31 Services worth $1,000 are not yet provided to the customer who paid on November 30.
December 31 One-eighth of the consulting paid for on December 1 has been received.
December 11 The company has performed $1,100 of services that the customer paid for on December 15.
Required:
1. Prepare entries for these transactions under the method that initially records prepaid expenses as assets and records unearned
revenues as liabilities. Also prepare adjusting entries at the end of the year.
2. Prepare entries for these transactions under the method that initially records prepaid expenses as expenses and records unearned
revenues as revenues. Also prepare adjusting entries at the end of the year.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare entries for these transactions under the method that initially records prepaid expenses as assets and records unearned revenues
as liabilities. Also prepare adjusting entries at the end of the year. (If no entry is required for a transaction/event, select "No journal
entry required in the first account field.)
View transaction list
Journal entry worksheet
< 1 2 3 4 5
Paid $2,000 cash for future advertising.
Note: Enter debits before credits.
Date
November
01
Record entry
General Journal
Clear entry
Journal entry worksheet
< 1 2
Date
December
01
Record entry
3
Note: Enter debits before credits.
6
7
8
Debit
General Journal
Clear entry
10
Paid $4,800 cash for consulting to be received over the next eight months.
Credit
View general Journal
4 5 6 7 8 9 10
>
Debit
Credit
View general Journal
Journal entry worksheet
< 1 2 3
Note: Enter debits before credits.
Date
November
01
<
Record entry
Paid $3,000 cash for 12 months of insurance through October 31 of the next
year.
Journal entry worksheet
2 3
Note: Enter debits before credits.
Date
November
30
4
<
Record entry
General Journal
5
4
Note: Enter debits before credits.
Date
December
15
Clear entry
Journal entry worksheet
1 2 3 4
5
General Journal
Clear entry
6
Received $7,600 cash for future services to be provided to a customer.
5
6
General Journal
7
6
8
Debit
7 8
7
Debit
8
9
Debit
9
9
Received $8,250 cash for future services to be provided to a customer.
10
View general Journal
Credit
10
Credit
View general journal
10
Credit
>
>
>
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