Problem #6 (15 points total)

Fuller Pest control charges customers $600 per year cash in advance for a service contract which provides the customer with a years worth of once-monthly standard pest control service visits. On January 1, 2021 it sold service contracts to 800 customers.

1. Prepare the journal entry to record the sale of the service contracts on January 1, 2021.

2. Fuller closes its books monthly and prepares financial statements. Prepare the monthly adjusting entry Fuller would prepare at January 31, 2021 related to these service contracts.