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E4.17 (LO

style="background-color:rgb(244,237,117);"> 2), AP Action Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2022.

Prepare post transaction and adjusting entries for prepayments.

  • 1. Purchased a 1-year insurance policy on June 1 for $1,800 cash.
  • 2. Paid $6,500 on August 31 for 5 months' rent in advance.
  • 3. On September 4, received $3,600 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 $1,000 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 $1,500 in advance from a gaming club. Determined that on December 31, $475 of these games had not yet been played.

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