Salvo 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 expenses and records unearned revenues as revenues. Also prepare adjusting entries at the end of the year.

 

Nov. 1 Paid S11,400 for 12 months of insurance coverage through October 31 of next year. 5 Received $8,000 cash for future services to be provided to a customer. 7 Paid S10,000 for future advertising. Dec. 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to the insurance account. 31 Services of $2,500 are not yet provided to the customer who paid on November 5. 31 Of the advertising paid for on November 7, $1,500 is not yet used.