Youve been hired by ABC Company to review several transactio

You\'ve been hired by ABC Company to review several transactions that were omitted as Adjusting Entries at December 31, 2015 as the bookkeeper was new and uncertain on how to record them. For each of the transactions listed below, record the appropriate AJE that would have been required at December 31st.

Transactions:                                               

A. On September 1, 2015, ABC received a $15,000 advance payment from a customer for services to be performed evenly over the next 15 months. The original entry was credited to a realaccount.

B. On March 1, 2015, ABC paid $12,720 for a four-year insurance policy. ABC debited a nominal account at that time.

For your account titles, choose from:  

Service Revenue

Unearned Revenue

Insurance Expense

Prepaid Insurance

2If ABC did not do either of the adjusting entries associated with Transactions A and B (from the above information) on December 31, 2015, determine the cumulative effect of all errors on assets, liabilities and equity at December 31, 2015.

Answer Format: Use O for overstated, U for understated, and NE for No Effect. Do not space between the O/U/NE and the dollar amount of the error. (Example: If Assets are Over by $2,000, record your answer as O2000)

Assets

Liabilities

Equity

Net Income (\'15)

$

$

$

$

Solution

Workings: