Question 2 (25 marks) Spotless Cleaning completed the following transactions during the month of October 2018: Oct 1 Prepaid insurance for October 2018 to December 2018, $90 Oct Performed cleaning services on credit, $350 Oct5 Purchased cleaning equipment on credit, $280 Oct 8 Paid repair expenses $10 Oct 11 Purchased office equipment for cash, $200 Oct 19 Collected $35 on account Oct 24 Performed cleaning services & collected cash $75 Oct 26 Paid account payables from 5 Oct Oct 29 Paid salary expense, $100 Oct 31 Recorded adjusting entry for October insurance expense Oct 3 Debited unearned revenue and credited revenue in an adjusting entry, $115 Required: (all calculations must be shown) a) Prepare journal entries for each transaction (5.5 marks) b) By completing the following table, show whether each transaction would be handled as a revenue or an expense for the month of October 2018, using both the cash and accrual basis. (12 marks) Amount of Revenue /(expense) for the month of October Date Cash Basis revenue /(expense) Accrual Basis revenue /(Expense Oct-01 c) Calculate the amount of profit or loss for the business under the accrual and cash bases for October 2018? (4 marks) d) Which method gives the best picture of the true earnings for Spotless Cleaning? Give reasons for your decision. (3.5 marks) Asia Pacific College of Business and Law Semester 2, 2019 Page 6 of 8 ASSIGNMENT $219