Question

Blossom 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 $1,980 cash. 2. Paid $6,700 on August 31 for 5 months' rent in advance. 3. On September 4, received $3,060 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 $800 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 $1,000 in advance from a gaming club. Determined that on December 31, $480 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.) Account Titles Debit Credit Date June 1 Aug. 31 Sept. 4 Nov. 30 Dec. 5

Answer 1

Journal Entries
Date	Particulars			Debit	Credit
1-Jun	Prepaid Insurance			$ 1,980.00
	To Cash				$ 1,980.00
31-Aug	Prepaid Rent			$ 6,700.00
	To Cash				$ 6,700.00
4-Sep	Cash			$ 3,060.00
	To Unearned Service Revenue				$ 3,060.00
30-Nov	Prepaid Cleaning			$ 1,600.00
	To Cash				$ 1,600.00
5-Dec	Cash			$ 1,000.00
	To Unearned Service Revenue				$ 1,000.00

Adjusting Entries
Date	Particulars			Debit	Credit
31-Dec	Insurance Expense			$ 1,155.00
	To Prepaid Insurance				$ 1,155.00
	($ 1980 x 7/12)
31-Dec	Rent Expense			$ 5,360.00
	To Prepaid Rent				$ 5,360.00
	($ 6700 x 4/5)
31-Dec	Unearned Service Revenue			$ 1,360.00
	To Service Revenue				$ 1,360.00
	($ 3060 x 4/9)
31-Dec	Maintenance and Repaid Exp			$    800.00
	To Prepaid Cleaning				$    800.00
	($ 1600 x 1/2)
31-Dec	Unearned Service Revenue			$    520.00
	To Service Revenue				$    520.00
	($ 1000 - $ 480)

Prepaid Insurance						Rent Expense
1-Jun	$ 1,980.00	31-Dec	$ 1,155.00			31-Dec	$ 5,360.00	End. Bal	$ 5,360.00
		End. Bal	$    825.00
Prepaid Rent						Service Revenue
31-Aug	$ 6,700.00	31-Dec	$ 5,360.00			End. Bal.	$ 1,880.00	31-Dec	$ 1,360.00
		End. Bal.	$ 1,340.00					31-Dec	$    520.00
Unearned Service Revenue						Maintenance and Repair Expense
31-Dec	$ 1,360.00	4-Sep	$ 3,060.00			31-Dec	$    800.00	End. Bal	$    800.00
31-Dec	$    520.00	5-Dec	$ 1,000.00
End. Bal.	$ 2,180.00
Prepaid Cleaning
30-Nov	$ 1,600.00	31-Dec	$    800.00
		End. Bal	$    800.00
Insurance Expense
31-Dec	$ 1,155.00	End. Bal	$ 1,155.00