Question

Brothers Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2021:

For each of the above transactions, prepare the journal entries to record the initial transaction. (List all debit entries before credit entries.

1.		Purchased a one-year insurance policy on June 1 for $1,500 cash.
2.		Paid $6,720 on August 31 for five months’ rent in advance.
3.		On September 4, received $3,960 cash in advance from a corporation to sponsor a game each month for a total of nine months for the most improved students at a local school.
4.		Signed a contract for cleaning services starting December 1, for $1,090 per month. Paid for the first two months on November 30. (Hint: Use the account Prepaid Cleaning to record this prepayment.)
5.		On December 5, received $1,370 in advance from a gaming club. Determined that on December 31, $520 of these games had not yet been played.

Answer 1

Journal Entry:

No	Date	Account Name	Debit	Credit
1.	June 1,2021	Prepaid Insurance	$1500
		Cash		$1500
		( to record prepaid insurance.)
2.	Aug.31,2021	Prepaid Rent	$ 6720
		Cash		$6720
		( to record prepaid rent.)
3.	Sep.4,2021	Cash	$3960
		Unearned Service Revenue		$3960
		( to record unearned revenue.)
4	Nov.30,2021	Prepaid Cleaning	$1090
		Cash		$1090
		( to record advance payment.)
5.	Dec.5,2021	Cash	$1370
		Unearned Service Revenue		$1370
		( to record unearned service revenue.)