Question

Sunland Company has the following balances in selected accounts on December 31, 2019.

Service Revenue		$42,400
Insurance Expense		3,900
Supplies Expense		2,500

All the accounts have normal balances. Sunland Company debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received. The following information below has been gathered at December 31, 2019.

1.		Sunland Company paid $3,900 for 12 months of insurance coverage on June 1, 2019.
2.		On December 1, 2019, Sunland Company collected $42,400 for consulting services to be performed from December 1, 2019, through March 31, 2020.
3.		A count of supplies on December 31, 2019, indicates that supplies of $800 are on hand.

Prepare the adjusting entries needed at December 31, 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

		Debit	Credit
December 31, 2019	Prepaid Insurance	1625		=3900*5/12
	Insurance expense		1625
December 31, 2019	Service Revenue	31800		=42400*3/4
	Unearned Service Revenue		31800
December 31, 2019	Supplies	800
	Supplies expense		800