Question

Pharoah Quest Games adjusts its accounts annually. The following information is available for the year ended December 31, 2020. 1. Purchased a 1-year insurance policy on June 1 for $1,740 cash. 2. Paid $6,100 on August 31 for 5 months' rent in advance. 3. On September 4, received $3,150 cash in advance from a company to sponsor a game each month for a total of 9 months for the most improved students at a local school. 4. Signed a contract for cleaning services starting December 1 for $900 per month. Paid for the first 2 months on November 30. (Hint: Use the account Prepaid Cleaning to record prepayments.) 5. On December 5, received $2,000 in advance from a gaming club. Determined that on December 31, $460 of these games had not yet been played. For each of the above transactions, prepare the journal entry to record the initial transaction. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles Debit Credit June 1 Aug. 31 Sept. 4 Nov. 30 Dec. 5

Answer 1

Journal

Date	Account Title and Explanation	Debit	Credit
June 1	Prepaid insurance	1,740
	Cash		1,740
	(To record prepaid insurance)
Aug 31	Prepaid rent	6,100
	Cash		6,100
	(To record prepaid rent)
Sept 4	Cash	3,150
	Unearned revenue		3,150
	(To record revenue received in advance)
Nov 30	Prepaid cleaning	900
	Cash		900
	(To record prepaid cleaning)
Dec 5	Cash	2,000
	Unearned revenue		2,000
	(To record revenue received in advance)

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