Park Sales and Service completed the following transactions during 2017:

Aug. 31 Paid $15,000 store rent covering the six-month period ending February 28,

2018.

Dec. 1 Collected $6,400 cash in advance from customers. The service revenue earned will be $1,600 each month over the four-month period ending March 31, 2018.

Required

1. Journalize these entries by debiting an asset account for Prepaid Rent and by crediting a liability account for Unearned Service Revenue. Explanations are not required.

2. Journalize the related adjustments at December 31, 2017.

3. Post the entries to T-accounts and show their balances at December 31, 2017. Posting references are not required.

4. Repeat Requirements 1 through 3. This time debit Rent Expense for the rent payment and credit Service Revenue for the collection of revenue in advance.

5. Compare the account balances in Requirements 3 and 4. They should be equal.