Reference no: EM132507157

Jack Tupp Auto Repair has a calendar year-end. The following transactions occurred during the year:

1. On September 1, it received $4,625 from a customer for prepaid oil changes. The customer will be using these oil changes in an equal amount for the next five (5) consecutive months.
2. On November 1, it signed a contract for newspaper advertising for $10,200 for the next year. You may assume an equal amount of the newspaper advertising is used up for each month during the term of the contract.
3. On December 15, it received an invoice from the utility company for $1,256. It paid the invoice in full on December 30.
4. On December 28, it billed $987 to a customer for repair services. The customer paid the invoice on December 31.

Questions:

Question 1. For each transaction, prepare the journal entry to record the initial transaction. Make sure to properly format your journal entry. (HINT: there are four entries you must make.)

Question 2. For each transaction, prepare any necessary adjusting journal entry as of December 31 (or any other applicable date provided). Make sure to properly format your journal entry. You may properly assume no adjusting entries were prepared at the end of each month. (HINT: there are four entries you must make.)

SPECIFIC INSTRUCTIONS: For each journal entry, type your response in the following format:

DR (account name) $(amount)

CR (account name) $(amount)

For example, if you are making an entry to debit Cash for $100 and credit Accounts Payable for $100, you would enter the following:

DR Cash $100

CR Accounts Payable $100

Journal Entries:

Sept 1. DR Cash 4625

CR Unearned revenue 4625

Nov 30. DR Prepaid advertisement 10200

CR Cash 10200

Dec 15. DR Utilities expense 1256

CR Accrued expenses 1256

Dec 28. Accounts receivable 987

CR Service revenue 987

Adjusting entries

Nov 1. DR Unearned revenue 3700

CR Service revenue 3700

Nov 1. DR Advertising expense 1700

CR Prepaid advertising 1700

Dec 30. DR Accrued expenses 1256

CR Cash 1256

Dec 31. DR Cash 987

CR Accounts receivables 987