Ricardo Construction began operations on December 1 In setti

Ricardo Construction began operations on December 1. In setting up its accounting proceuures comp any decided to debit expense accounts when it prepays its expenses and to credit revenue accounts ce. Prepare iournal entries for items a through d and the ad when customers pay for services in advan justi nd ng entries as of its December 31 period-end for items e through g. (Entries can draw from the fol- lowing partial chart of accounts: Cash; Accounts Receivable; Interest Receivable; Suppli es; Prepaid Engpeme in ered Bp nKemodeling Fees: Remeling Fees Earned Supplies Expemse Expense; Interest Expense.) a. Supplies are purchased on December 1 for $2,000 cash. b. The company prepaid its insurance premiums for $1,540 cash on December 2 c. On December 15, the company receives an advance payment of $13,000 cash from a customer for re- modeling work. d. On December 28, the company receives $3,700 cash from another customer for remodeling work to be performed in January e. A physical count on December 31 indicates that the company has $1,840 of supplies available. f. An analysis of the insurance policies in effecet on December 31 shows that $340 of insurance had expired. g. As of December 31, only one remodeling project has been worked on and completed. The s5,570 fee for this project had been received in advance and recorded as remodeling fees earned

Solution

For the second part the contributed capital is not mentioned.. Unless this is known the balance shet will not reflect true picture.

Ricardo Construction
General journal
Ref.	Date	Account title	Debit	Credit
a	Dec.1	Supplies	2000
		Cash		2000
		(Purchase of supplies for cash)
b	Dec.2.	Insurance Expense	1540
		Cash		1540
		(Prepaid insurance premiums)
c	Dec.15	Cash	13000
		Remodelling fee earned		13000
		(Advance received from customer)
d	Dec.28	Cash	3700
		Remodelling fee earned		3700
		(Advance received from customer)
e	Dec.31	Supplies expense	160
		Supplies		160
		(Supplies used during the month accounted)
f	Dec.31	Prepaid insurance	1200
		Insurance Expense		1200
		(The prepaid insurance accounted)
g	Dec.31	Remodelling fee earned	11130
		Unearned revenue		11130
		(Advance received against future service accounted)