Question

Blossom Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2022.

1.		Purchased a 1-year insurance policy on June 1 for $2,520 cash.
2.		Paid $7,670 on August 31 for 5 months’ rent in advance.
3.		On September 4, received $4,320 cash in advance from a corporation to sponsor a game each month for a total of 9 months for the most improved students at a local school.
4.		Signed a contract for cleaning services starting December 1 for $1,180 per month. Paid for the first 2 months on November 30. (Hint: Use the account Prepaid Cleaning to record prepayments.)
5.		On December 5, received $1,770 in advance from a gaming club. Determined that on December 31, $560 of these games had not yet been played.

(a)

For each of the above transactions, prepare the journal entry to record the initial transaction. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

a)

Date	Particulars	Debit	Credit
Jun-01	Insurance expense	1,470
	Prepaid insurance	1,050
	Cash		2,520
	[Insurance policy purchased for on year]
Aug-31	Rent expense	6,136
	Prepaid rent	1,534
	Cash		7,670
	[Rent of 5 months paid ]
Sep-04	Cash	4,320
	Sponsorship income		1,920
	Unearned Sponsorship income		2,400
	[Sponsorship received in cash]
Nov-30	Cleaning expense	1,180
	Prepaid cleaning	1,180
	Cash		2,360
	[Paid for cleaning contract]
Dec-05	Cash	1,770
	Gaming club income		1,210
	Unearned Gaming club income		560
	[Receipts from gaming club recorded ]

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