Read each scenario, decide whether the company is using Cash basis or Accrual basis, and then enter your answer to the question. The Johnny Flowers Law Firm prepays for advertising in the local newspaper. On January 1, the law firm paid $3,480 for six months of advertising. Johnny Flowers Law Firm recorded $3,480 in the Prepaid Advertising account. If Johnny Flowers Law Firm had recorded their expenses using the other method, how much advertising expense would they have recorded for the two months ending February 28? Enter this value as a positive number. Safe Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Safe Home has collected $2,260 from cash-paying customers. Safe Home's remaining customers owe the business $1,340.Safe Home recorded $2,260 of service revenue for the year. If Safe Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year? Splendid Occasions received $840 for services to be performed for the next 8 months on March 31 and recorded this transaction using the Unearned Revenue account. If Splendid Occasions had recorded their service revenue using the other method, how much service revenue would they have recorded for the year? Sweet Catering completed the following selected transactions during May 2016: May 1: Prepaid rent for three months. $1.200 May 5: Received and paid electricity bill, $240 May 9: Received cash for meals served to customers, $3,020 May 14: Paid cash for kitchen equipment, $2,630 May 23: Served a banquet on account, $1,850 May 31: Made the adjusting entry for rent (from May 1). May 31: Accrued salary expense, $3,230 May 31: Recorded depreciation for May on kitchen equipment, $520 If Sweet Catering had recorded transactions using the Cash method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign. If Sweet Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign. Identify whether each account would appear on the Balance Sheet or the Income Statement. Salaries (and Wages) Payable Salaries (and Wages) Expense Land Retained Earnings Depreciation Expense Accounts Receivable Fill in the t-accounts for each situation and label each transaction as Deferrals/Prepaid or Accrual. Calculate the adjusted balance and use a Bal. post reference to show the ending balance of each account. The unadjusted balance of Office Supplies at Dec. 31 is $7,400 and at year end the office supplies on hand totaled $4,320. Adjustment Type: Deferrals/Prepaids Supplies Expense Office Supplies Dec. 31 4320 Dec 31 7400 4320 Dec. 31 4320 Bal. 3080 Used prepaid insurance of $2,760. The Prepaid Insurance unadjusted balance as of December 31 is $8,500. Adjustment Type: Deferrals/Prepaids Insurance Expense Prepaid Insurance Dec. 31 V 2760 Dec. 31 Dec. 31 v Dec Dec. 31 Bal. V 8500 8500 Cv Bal. Bal. v C V Employees earned $2,200 in salaries that will be paid next month. The Salaries Expense unadjusted balance as of December 31 is $6,700. Adjustment Type: Deferrals/Prepaids Salaries Expense Salaries Payable Dec. 31 6700 2200 2200 Dec. 31 Dec. 31 2200 Bal. Bal. V 8900 8900 C v v 2200 2200 Bal. Bal. Vi Journalize the adjusting entry needed at December 31 for each situation. Use the Chart of Accounts to review account names! Depreciation for the current year includes Equipment, $3,700. Date Accounts and Explanation Debit Credit Incurred interest expense of $2,900 Date Accounts and Explanation Debit Credit The unadjusted balance of Office Supplies at Dec. 31 is $4,100 and at year end the office supplies on hand totaled $1,200. Date Accounts and Explanation Debit Credit