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Concept explainers
Problem 3-6B
Recording prepaid expenses and unearned revenues
P4
Tremor Co. had the following transactions in the last two months of its fiscal year ended May 31. (Entries can draw from the following partial chart of accounts: Cash; Prepaid Insurance; Prepaid Advertising; Prepaid Consulting Fees; Unearned Service Fees; Services Fees Earned ;Insurance Expense; Advertising Expense; Consulting Fees Expense.)
Apr. 1- Paid $2,450 cash to an accounting firm for future consulting services.
1- Paid $3,600 cash for 12 months of insurance through March 31 of the next year.
30- Received $8,500 cash for future services to be provided to a customer.
May 1- Paid $4,450 cash for future newspaper advertising.
23- Received $10,450 cash for future services to be provided to a customer.
31- Of the consulting services paid for on April 1, $2,000 worth has been performed.
31- A portion of the insurance paid for on April 1 has expired. No adjustment was made in April to Prepaid Insurance.
31- Services worth $4,600 are not yet provided to the customer who paid on April
30.
31- Of the advertising paid for on May 1, $2,050 worth is not yet used.
31- The company has performed $5,500 of services that the customer paid for on May
23.
Required
1. Prepare entries for these transactions under the method that initially records prepaid expenses and unearned revenues in
2. Prepare entries for these transactions under the method that initially records prepaid expenses and unearned revenues in income statement accounts. Also prepare adjusting entries at the end of the year.
Analysis Component
3. Explain why the alternative sets of entries in parts 1 and 2 do not result in different financial statement amounts.
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Chapter 3 Solutions
FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
- Hi expert please help me this questionarrow_forwardRequired information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,310 in assets to launch the business. On December 31, the company's records show the following items and amounts. Cash Accounts receivable $ 10,200 15,200 Office supplies 3,550 Land 45,990 Office equipment 18,310 Accounts payable Owner investments 84,310 8,740 Cash withdrawals by owner Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 2,340 15,200 3,910 7,350 790 610 Exercise 1-19 (Algo) Preparing a statement of owner's equity LO P2 Frnst Genculting Hint Jasmin Ernst Capitalonarrow_forwardHelparrow_forward
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