Ricardo Construction began operations on December 1. In setting up its accounting procedures, the company decided to debit expense accounts when it prepays its expenses and to credit revenue accounts when customers pay for services in advance. Prepare journal entries for items a through d and the adjusting entries as of its December 31 period-end for items e through g. Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Interest Receivable; Supplies; Prepaid Insurance; Unearned Remodeling Fees; Remodeling Fees Earned; Supplies Expense; Insurance Expense; and Interest Expense. a. Supplies are purchased on December 1 for $2,000 cash. b. The company prepaid its insurance premiums for $1,540 cash on December 2. c. On December 15, the company receives an advance payment of $13,000 cash from a customer for remodeling work. d. On December 28, the company receives $3,700 cash from another customer for remodeling work to be performed in January. e. A physical count on December 31 indicates that the company has $1,840 of supplies available. f. An analysis of insurance policies in effect on December 31 shows that $340 of insurance coverage had expired. g. As of December 31, only one remodeling project has been worked on and completed. The $5,570 fee for this project had been received in advance and recorded as remodeling fees earned.
Ricardo Construction began operations on December 1. In setting up its accounting procedures, the company
decided to debit expense accounts when it prepays its expenses and to credit revenue accounts when
customers pay for services in advance. Prepare
as of its December 31 period-end for items e through g. Entries can draw from the following partial
chart of accounts: Cash;
Remodeling Fees; Remodeling Fees Earned; Supplies Expense; Insurance Expense; and Interest Expense.
a. Supplies are purchased on December 1 for $2,000 cash.
b. The company prepaid its insurance premiums for $1,540 cash on December 2.
c. On December 15, the company receives an advance payment of $13,000 cash from a customer for remodeling
work.
d. On December 28, the company receives $3,700 cash from another customer for remodeling work to be
performed in January.
e. A physical count on December 31 indicates that the company has $1,840 of supplies available.
f. An analysis of insurance policies in effect on December 31 shows that $340 of insurance coverage had
expired.
g. As of December 31, only one remodeling project has been worked on and completed. The $5,570 fee
for this project had been received in advance and recorded as remodeling fees earned.
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