Frank Ledger, a non-designated accountant, has agreed to provide twelve months of bookkeeping services to Digital Dreams Inc. (DDI), a computer equipment and accessories retailer. Mr. Ledger will compile the accounting records of DDI every month and provide an unaudited financial statement. Mr. Ledger has agreed not to invoice DDI during the year, and DDI has agreed to provide Mr. Ledger with a free computer system. The computer would normally sell for $3,000. Mr. Ledger has indicated that he would typically charge approximately $250/month for similar bookkeeping services, although the actual amount invoiced per month would depend on the volume of transactions and a number of other factors.
Required: Assume the contract described above is signed on October 1 and Mr. Ledger’s fiscal year end is December 31. Prepare all the required journal entries for Mr. Ledger between these two dates.