Prepayments, Collections in Advance

Greensboro Properties Inc. owns a building in which it leases office space to small businesses and professionals. During 2019, Greensboro Properties engaged in the following transactions:

1. On March 1, Greensboro Properties paid $10,200 in advance to Patterson Insurance Company for 1 year of insurance beginning March 1, 2019. The full amount of the prepayment was debited to prepaid insurance.
2. On May 1, Greensboro Properties received $33,000 for 1 year's rent from Angela Cottrell, a lawyer and new tenant. Greensboro Properties credited unearned rent revenue for the full amount collected from Cottrell.
3. On July 31, Greensboro Properties received $245,400 for 6 months' rent on an office building that is occupied by Newnan and Calhoun, a regional accounting firm. The rental period begins on August 1, 2019. The full amount received was credited to unearned rent revenue.
4. On November 1, Greensboro Properties paid $6,900 to Pinkerton Security for 3 months' security services beginning on that date. The entire amount was debited to prepaid security services.

Required:

1. Prepare the journal entry to record the receipt or payment of cash for each of the transactions.

March 1	Prepaid Insurance	fill in the blank 411d2d0a8fda029_2
	Cash		fill in the blank 411d2d0a8fda029_4
	(Record prepayment for insurance)
May 1	Cash	fill in the blank 411d2d0a8fda029_6
	Unearned Rent Revenue		fill in the blank 411d2d0a8fda029_8
	(Record receipt of cash for rent)
July 31	Cash	fill in the blank 411d2d0a8fda029_10
	Unearned Rent Revenue		fill in the blank 411d2d0a8fda029_12
	(Record receipt of cash for rent)
Nov. 1	Prepaid Security Services	fill in the blank 411d2d0a8fda029_14
	Cash		fill in the blank 411d2d0a8fda029_16
	(Record prepayment for services)

2. Prepare the adjusting entries you would make at December 31, 2019, for each of these items.

a.

Dec. 31	Insurance Expense	fill in the blank 783c6d020f9affc_2
	Prepaid Insurance		fill in the blank 783c6d020f9affc_4
	(Record insurance expense)

b.

Dec. 31	Unearned Rent Revenue	fill in the blank 6e6a90f36029fea_2
	Rent Revenue		fill in the blank 6e6a90f36029fea_4
	(Record earned rent revenue)

c.

Dec. 31	Unearned Rent Revenue	fill in the blank a63b68f9b06bf89_2
	Rent Revenue		fill in the blank a63b68f9b06bf89_4
	(Record earned rent revenue)

d.

Dec. 31	Security Services Expense	fill in the blank ce0df204f044042_2
	Prepaid Security Services		fill in the blank ce0df204f044042_4
	(Record use of prepaid security services)

3. Conceptual Connection: What would be the total effect on the income statement and balance sheet if these entries were not recorded? Input all amounts as positive values.

a.
b.
c.
d.

Revenues		by $fill in the blank d942c0047f84f99_6
Expenses		by $fill in the blank d942c0047f84f99_8
Net income		by $fill in the blank d942c0047f84f99_10
Assets		by $fill in the blank d942c0047f84f99_12
Liabilities		by $fill in the blank d942c0047f84f99_14
Retained earnings		by $fill in the blank d942c0047f84f99_16