1. You were recently hired as the Senior Accountant of a regional marketing company that provides advertising services to clients. The company typically signs five-year contracts, prepaid in full, with clients. Your first day is on December 31 and the Controller (your direct supervisor) asks you to prepare the financial accounting adjusting journal entry relating to all revenue transactions for the year.

(1) Why does the company need to prepare this adjusting journal entry? In your response, be sure to include the account names and types necessary to prepare this adjusting entry.

(2) Name and describe two accounting principles that are relevant to question (1) above? How so?

2. Please provide the following information, from the business perspective, for each of the following business transactions. Assume your responses are as of EOD (end of day) on the date of the transaction.

1. Which portions of the accounting equation changed (i.e. Increase, Decrease, or No Effect)? Have Revenues or Expenses in the Income Statement been affected?

2. Which specific line-item accounts have been affected (e.g. Cash, Revenues, Accounts Payable, etc.)?

3. How did each of these line-items change? Increase or decrease? (1) [1 point] On May 21th , 2022, DC Comics, Inc. purchases a line of Superman toys (to be resold) from a vendor for $10,000 in Cash.

(2a) On December 30th, 2022, a laundry maintenance company, Suds n Go, signs a contract to provide laundry machine maintenance to a local apartment complex for five years beginning on January 1st, 2023. The contract totals $250,000. No cash or deposit is received as part of the contract signing.