Classic Customs began operations on December 1, 2020. In setting up the bookkeeping procedures, the company decided to debit expense accounts when the company prepays its expenses and to credit revenue accounts when customers pay for services in advance. Supplies were purchased on December 1 for $8,000.The company prepaid insurance premiums of $3,200 on December 2.On December 15, the company received an advance payment of $16,100 from one customer for re-modeling work.By counting the supplies on December 31, Classic Customs determined that $1,450 was on hand.An analysis of the insurance policies in effect on December 31 showed that $800 of insurance coverage had expired.As of December 31, it was determined that $8,500 of the amount received in advance on December 15 had been earned.Prepare journal entries for items (a) through (c) and adjusting entries as of December 31, 2020, for items (d) through (f).

Adjusting entry means where some adjustment need to be made at the end of specified period for…

Answered: Classic Customs began operations on…

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 5PA: Review the following transactions, and prepare any necessary journal entries. A. On July 16, Arrow...

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Classic Customs began operations on December 1, 2020. In setting up the bookkeeping procedures, the company decided to debit expense accounts when the company prepays its expenses and to credit revenue accounts when customers pay for services in advance.

Supplies were purchased on December 1 for $8,000.
The company prepaid insurance premiums of $3,200 on December 2.
On December 15, the company received an advance payment of $16,100 from one customer for re-modeling work.
By counting the supplies on December 31, Classic Customs determined that $1,450 was on hand.
An analysis of the insurance policies in effect on December 31 showed that $800 of insurance coverage had expired.
As of December 31, it was determined that $8,500 of the amount received in advance on December 15 had been earned.

Prepare journal entries for items (a) through (c) and adjusting entries as of December 31, 2020, for items (d) through (f).

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