Record journal entries for these transactions assuming Garcia follows the usual practice of recording a prepayment of an expense in an asset account and recording a prepayment of revenue received in a liability account.Garcia Company had the following selected transactions during the year.
Jan. 1 The company paid $6,000 cash for 12 months of insurance coverage beginning immediately for the calendar year.
May 1 The company received $2,400 cash in advance for 6 months of contracted services commencing on May 1 and concluding on October 31.
Dec. 31 The company prepared any necessary year-end adjusting entries related to insurance coverage and services rendered.
1. Record journal entries for these transactions assuming Garcia follows the usual practice of recording a prepayment of an expense in an asset account and recording a prepayment of revenue received in a liability account.
2. Record journal entries for these transactions assuming Garcia follows the alternative practice of recording a prepayment of an expense in an expense account and recording a prepayment of revenue received in a revenue account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)