Read each scenario, decide whether the company is using Cash basis or Accrual basis, and then enter your answers to the questions. The Blue Nile Law Firm prepays for advertising in the local newspaper. On January 1, the law firm paid $940 for six months of advertising. Blue Nile Law Firm recorded $940 in the Prepaid Advertising account. If Blue Nile 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 $1,380 from cash-paying customers. Safe Home's remaining customers owe the business $1,180. Safe Home recorded $1,380 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? Marvelous Occasions received $3,320 for services to be performed for the next 10 months on July 31 and recorded this transaction using the Unearned Revenue account. If Marvelous 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 5: Received and paid electricity bill, $50 May 9: Received cash for meals served to customers, $240 May 23: Served a banquet on account, $1,940 May 31: Accrued salary expense, $3,360 May 31: Recorded prepaid insurance expired, $430 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. Prepaid Rent Common Stock Income Taxes Payable Land Cash Service Revenue Fill in the t-accounts for each situation and label each transaction as Deferrals/Prepaid, Accrual, or Depreciation. Use Unadj. Bal. as the label for the opening balance of each account. Calculate the adjusted balance and use a Bal. posting reference to show the ending balance of each account. Enter each transaction on the first available line in the T-Account. A two-year insurance policy for $10,560 was purchased on November 1 of the current year. Record the transaction for the two months ended December 31. Adjustment Type: Insurance Expense Prepaid Insurance Employees earned $4,890 in salaries that will be paid next month. The Salaries Expense unadjusted balance as of December 31 is $10,400. Adjustment Type: Salaries Expense Salaries Payable Customers were billed for $540 for work completed. The Service Revenue unadjusted balance as of December 31 is $11,700. Adjustment Type: Accounts Receivable Service Revenue Customers were billed for $540 for work completed. The Service Revenue unadjusted balance as of December 31 is $11,700. Adjustment Type: Accounts Receivable Service Revenue Customers were billed for $2,400 for work completed. Date Accounts and Explanation Debit Credit Insurance for the next six months was paid on November 1st in the amount of $1,170. Record the journal entry for the two months of insurance expired at year-end. Date Accounts and Explanation Debit Credit Rent for the year was prepaid on January 1 in the amount of $5,280. Record the transaction for December's rent that has expired. Date Accounts and Explanation Debit Credit