3A-38A (similar to) Friendly Faces Pack\'n Mail completed the following transact

Question

3A-38A (similar to) Friendly Faces Pack'n Mail completed the following transactions during 2016: Requirements repaid expenses and credits a liability account for uneamed revenues. (R 1. Journalize the transactions assuming that Friendly Faces debits an asset account for prepaid expenses and credits a liability account for unearned revenues. Journalize the related adjusting entries at December 31, 2016. 2. 3. Post the journal and adjusting entries to the T-accounts, and show their balances at 4. Repeat Requirements 1-3 This time debit an expense account for prepaid expenses and 5. Compare the account balances in Requirements 3 and 4. They should be equal. December 31, 2016. (ignore the Cash account.) credit a revenue account for unearned revenues. Print Done Nov. 1 Paid $3,600 store rent covering the three-month period ending January 31, 2017. Nov. 1 Paid $10,800 insurance covering the six-month period ending April 30, 2017 Dec. 1 Collected $14,400 cash in advance from customers. The service revenue will be eaned $2,400 monthly over the six-month period ending May 31, 2017 Collected $4,000 cash in advance from customers. The service revenue will be eamed $1,000 monthly over the four- Dec. 1 month period ending March 31, 2017

Explanation / Answer

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Journal Enteries Date Particulars Debit Credit 1-Nov Prepaid Rent A/c Dr $3,600.00       To Cash A/c $3,600.00 (Being rent paid from Nov'16 to Jan'17) 1-Nov Prepaid insurance A/c Dr $10,800.00       To Cash A/c $10,800.00 (Being Insurance paid from Nov'16 to Apr'17) 1-Dec Cash A/c Dr $14,400.00       To Unearned Revenue A/c $14,400.00 (Being cash received for revenue for period Dec'16 to May'17) 1-Dec Cash A/c Dr $4,000.00       To Unearned Revenue A/c $4,000.00 (Being cash received for revenue for period Dec'16 to Mar'17)

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