Question

Exercise 3-12A Adjusting for prepaids recorded as expenses and unearned revenues recorded as revenues LO P6 10 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 dand the adjusting entries as of its December 31 period-end for iten e through g Hint a. Supplies are purchased on December 1 for $3,600 cash. b. The company prepa aid its insurance premiums for $2,340 cash on December 2 Print c. On December 15, the company receives an advance payment of $29,000 cash from a customer for remodeling wo d. On December 28, the company receives $5,300 cash from another customer for remodeling work to be performed in January e. A physical count on December 31 indicates that the Company has $2.000 of supples available f. An analysis of the insurance policies in effect on December 31 shows that $500 of insurance coverage had expired g. As of December 31, only one remodeling project has been worked on and completed. The $5,730 fe a for this project had received in advance and recorded as remodeling fees earned

Answer 1

Journal

Date	Account title	Debit	Credit
a Dec.1	Supplies Expense	3,600
	Cash		3,600
b Dec. 2	Insurance expense	2,340
	Cash		2,340
c Dec. 15	Cash	29,000
	Remodeling fee earned		29,000
d Dec. 28	Cash	5,300
	Remodeling fee earned		5,300
e Dec 31	Supplies	2,000
	Supplies expense		2,000
f Dec. 31	Prepaid Insurance expense	1,840
	Insurance expense		1,840
g Dec. 31	Remodeling fee earned	28,570
	Unearned remodeling fee earned		28,570

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