Question

Windsor 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 $1,560 cash. 2. Paid $5,590 on August 31 for 5 months’ rent in advance. 3. On September 4, received $3,150 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 $860 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 $1,290 in advance from a gaming club. Determined that on December 31, $410 of these games had not yet been played.

For each of the above transactions, prepare the adjusting journal entry that is required on December 31. (Hint: Use the account Service Revenue for item 3 and Maintenance and Repairs Expense for item 4.) (Round answers to 0 decimal places, e.g. 5,275. 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

Transaction	Date	General Journal	Debit	Credit
1	Dec. 31	Insurance expense	$910
		Prepaid insurance		$910
		( To record insurance expense)
2.	Dec. 31	Rent expense	$4,472
		Prepaid rent		$4,472
		( To record rent expense)
3.	Dec. 31	Unearned revenue	$1,400
		Service revenue		$1,400
		( To record unearned revenue earned)
4	Dec. 31	Repairs and maintenance expense	$860
		Prepaid clearing		$860
		( To record repairs and maintenance expense)
5	Dec. 31	Unearned revenue	$880
		Service revenue		$880
		( To record unearned revenue earned)

1.

Insurance expense for 1 year = $1,560

Insurance expense for 7 months (June to December) = 1,560 x 7/12

= $910

2.

Rent expense for 5 months = $5,590

Rent expense for 4 months ( September to December ) = 5,590 x 4/5

= $4,472

3.

Service revenue for 9 months = $3,150

Service revenue for 4 months ( September to December ) = 3,150 x 4/9

= $1,400

5.

Unearned revenue, unadjusted = $1,290

Unearned revenue, ending = $410

Unearned revenue earned = Unearned revenue, unadjusted- Unearned revenue, ending

= 1,290-410

= $880