Nov. 1 Paid $1,800 cash for future newspaper advertising. 1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year. 30 Received $3,600 cash for future services to be provided to a customer. Dec. 1 Paid $3,000 cash for a consultant's services to be received over the next three months. 15 Received $7,950 cash for future services to be provided to a customer. 31 Of the advertising paid for on November 1, $1,200 worth is not yet used. 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid Insurance. 31 Services worth Ssi.500 are not yet provided to the customer who paid on November 30. 31 One-third of the consulting services paid for on December 1 have been received. 31 The company has performed $3,300 of services that the customer paid for on December 15. Required 1. Prepare entries for these transactions under the method that 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 records prepaid expenses as expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year. Analysis Component 3. Explain why the alternative sets of entries in requirements 1 and 2 do not result in different financial statement amounts.
Nov. 1 Paid $1,800 cash for future newspaper advertising. 1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year. 30 Received $3,600 cash for future services to be provided to a customer. Dec. 1 Paid $3,000 cash for a consultant's services to be received over the next three months. 15 Received $7,950 cash for future services to be provided to a customer. 31 Of the advertising paid for on November 1, $1,200 worth is not yet used. 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid Insurance. 31 Services worth Ssi.500 are not yet provided to the customer who paid on November 30. 31 One-third of the consulting services paid for on December 1 have been received. 31 The company has performed $3,300 of services that the customer paid for on December 15. Required 1. Prepare entries for these transactions under the method that 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 records prepaid expenses as expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year. Analysis Component 3. Explain why the alternative sets of entries in requirements 1 and 2 do not result in different financial statement amounts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Paid $1,800 cash for future newspaper advertising.
1 Paid $2,460 cash for 12 months of insurance through October 31 of the next year.
30 Received $3,600 cash for future services to be provided to a customer.
Dec. 1 Paid $3,000 cash for a consultant's services to be received over the next three months.
15 Received $7,950 cash for future services to be provided to a customer.
31 Of the advertising paid for on November 1, $1,200 worth is not yet used.
31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in
November to Prepaid Insurance.
31 Services worth $1.500 are not yet provided to the customer who paid on November 30.
31 One-third of the consulting services paid for on December 1 have been received.
31 The company has performed $3,300 of services that the customer paid for on December 15.
Nov. 1
Required
1. Prepare entries for these transactions under the method that 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 records prepaid expenses as expenses and
records unearned revenues as revenues. Also prepare adjusting entries at the end of the year.
Analysis Component
3. Explain why the alternative sets of entries in requirements 1 and 2 do not result in different financial
statement amounts.
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