Prepare entries for these transactions

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Reference no: EM131528353

Question: Quisp Co. had the following transactions in the last two months of its year ended December 31.

Nov. 1 Paid $1,500 cash for future newspaper advertising.

1 Paid $2,160 cash for 12 months of insurance through October 31 of the next year.

30 Received $3,300 cash for future services to be provided to a customer. Dec.

1 Paid $2,700 cash for a consultant's services to be received over the next three months.

15 Received $7,650 cash for future services to be provided to a customer.

31 Of the advertising paid for on November 1, $900 worth is not yet used.

31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to Prepaid Insurance.

31 Services worth $1,200 are not yet provided to the customer who paid on November 30.

31 One-third of the consulting services paid for on December 1 have been received.

31 The company has performed $3,000 of services that the customer paid for on December 15.

Required: 1. Prepare entries for these transactions under the method that records prepaid expenses as assets and records unearned revenues as liabilities. Also prepare adjusting entries at the end of the year.

2. Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year.
Analysis Component

3. Explain why the alternative sets of entries in requirements 1 and 2 do not result in different financial statement amounts.

Reference no: EM131528353

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