Question

Exercise 3-15 a-c (Part Level Submission) Sheridan Company 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 $1,680 cash. Pald $5,000 on August 31 for 5 months' rent in advance 3. On September 4, received $3,780 cash in advance from a corporation 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 $850 per month. Paid for the first 2 months on November 30. (: Use the account Prepaid Cleaning to record prepayments.) 5. On December 5, received $1,400 in advance from a gaming club. Determined that on December 31, $600 of these games had not yet been played. 2 (a) For each of the above transactions, prepare the journal entry to record the initial transaction. (Credit account tities are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit No. 1. 2. 3.

Answer 1

Prepare the journal entry to record the initial transaction? Answer: Credit No. Date Account Titles and Explanation Debit 1 Jun. 1, 2017 Prepaid Insurance $ 1,680.00 Cash $ 1,680.00 $5,000.00 2 Aug. 31, 2017 Prepaid Rent Cash $5,000.00 $3,780.00 3 Sept. 4, 2017 Cash Unearned Service Revenue $3,780.00 $ 1,700.00 4 Nov. 30, 2017 Prepaid Cleaning Cash $ 1,700.00 $ 1,400.00 5 Dec. 5, 2017 Cash Unearned Service Revenue $ 1,400.00 I have used the format as given in the question and hence no explanation has been added to the journal entries. The above entries are just initial transactions and adjusting entries need to be passed at the year end for expired portion. For example Prepaid insurance has been expired for 7 months that need to be expensed as insurance expense by removing from prepaid insurance. Please give thumbsup button if this solution helped. If you need any further explanation, kindly request in the comment section, glad to be helpful.