Jan. 1 The company paid $6,000 cash for 12 months of insurance coverage beginning immediately. Aug. 1 The company received $2,400 cash in advance for 6 months of contracted services beginning on August 1 and ending on January 31. Dec. 31 The company prepared any necessary year-end adjusting entries related to insurance coverage and services performed. a. Record journal entries for these transactions assuming Garcia follows the usual practice of recording a prepayment of an expense in an asset account and recording a prepayment of revenue received in a liability account. b. Record journal entries for these transactions assuming Garcia follows the alternative practice of re- cording a prepayment of an expense in an expense account and recording a prepayment of revenue received in a revenue account.
Jan. 1 The company paid $6,000 cash for 12 months of insurance coverage beginning immediately. Aug. 1 The company received $2,400 cash in advance for 6 months of contracted services beginning on August 1 and ending on January 31. Dec. 31 The company prepared any necessary year-end adjusting entries related to insurance coverage and services performed. a. Record journal entries for these transactions assuming Garcia follows the usual practice of recording a prepayment of an expense in an asset account and recording a prepayment of revenue received in a liability account. b. Record journal entries for these transactions assuming Garcia follows the alternative practice of re- cording a prepayment of an expense in an expense account and recording a prepayment of revenue received in a revenue account.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 69E: Unearned Revenue Jennifers Landscaping Services signed a $400-per-month contract on November 1,...
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Garcia Company had the following selected transactions during the year. (A partial chart of accounts follows: Cash;
Transcribed Image Text:Jan. 1 The company paid $6,000 cash for 12 months of insurance coverage beginning immediately.
Aug. 1 The company received $2,400 cash in advance for 6 months of contracted services beginning on
August 1 and ending on January 31.
Dec. 31 The company prepared any necessary year-end adjusting entries related to insurance coverage
and services performed.
a. Record journal entries for these transactions assuming Garcia follows the usual practice of recording a
prepayment of an expense in an asset account and recording a prepayment of revenue received in a
liability account.
b. Record journal entries for these transactions assuming Garcia follows the alternative practice of re-
cording a prepayment of an expense in an expense account and recording a prepayment of revenue
received in a revenue account.
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