Gomez Co. had the following transactions in the last two months of its year ended December 31. Prepare entries for these transactions under the method that records prepaid expenses as assets and records unearned revenue as liabilities. Also prepare adjusting entries at the end of the year.

November 1: Paid $1,800 cash for future newspaper advertising.

November 1: Paid $2,460 cash for 12 months of insurance through October 31 of next year.

November 30: Received $3,600 cash for future services to be provided to a customer.

December 1: Paid $3,000 cash for a consultant's services to be received over the next three months.

December 15: Received $7,950 cash for future services to be provided to a customer.

December 31: Of the advertising paid for on November 1, $1,200 worth is not yet used.

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

December 31: Services worth $1,500 are not yet provided to the customer who paid on November 30.

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

December 31: The company has performed $3,300 of services that the customer paid for on December 15.

Prepaid Expenses.

The outflows pertaining to the future time period or outflows that will provide benefit in the future time periods are known as prepaid expenses. Such outflows are reported as resources and are adjusted at the end of the reporting period.