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I am confused with this adjusting entry. Thanks. A. ON 10/1 THE COMPANY ENTERED INTO A ONE YEAR DEVELOPMENT CONTRACT. THE TOTAL AMOUNT OF THE
I am confused with this adjusting entry. Thanks.
A. ON 10/1 THE COMPANY ENTERED INTO A ONE YEAR DEVELOPMENT CONTRACT. THE TOTAL AMOUNT OF THE CONTRACT WAS $1,500,000. ON 10/1 THE COMPANY RECEIVED $200,000 AS A PREPAYMENT ON THE CONTRACT. THE BOOKKEEPER DEBITED CASH AND CREDITED CONTRACT REV. TO RECORD THE PREPAYMENT. ON 12/31 20% OF THE CONTRACT WAS COMPLETED DATE ACCOUNT DR CR B. THE COMPANY PURCHASED LIABILITY INSURANCE ON 3/1 FOR ONE YEAR AND PAID $36,000 FOR THE POLICY. THE BOOKKEEPER DEBITED INSURANCE EXPENSE AND CREDITED CASH TO RECORD THE TRANSACTION. DATE ACCOUNT DR CR C. ON 12/15 THE COMPANY SUBLEASED OFFICE SPACE TO A TENANT FOR $20,000 PER MONTH. THE COMPANY RECEIVED THE FIRST MONTHS RENT ON 12/15 AND THE BOOKKEEPER RECORDED THE TRANSACTION BY DEBITING CASH AND CREDITING RENT REVENUE. DATE ACCOUNT DR CRStep by Step Solution
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