Gracio Cohad the Following Transactions in the Last Two Months of of Its

question 372

Essay

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.
$$\begin{array} { | l | l | } \hline \text { Nov. } 1 & \text { Paid } \$ 11,400 \text { for } 12 \text { months of insurance coverage through October } 31 \text { of next } \\\hline 5 & \text { Received } \$ 8,000 \text { cash for future services to be provided to a customer. } \\\hline 7 & \text { Paid } \$ 10,000 \text { for future advertising. } \\\hline \text { Dec. } 31 & \begin{array} { l } \text { A portion of the insurance paid for on November } 1 \text { has expired. No adjustment } \\\text { was made in November to the insurance account. }\end{array} \\\hline 31 & \begin{array} { l } \text { Services of } \$ 2,500 \text { are not yet provided to the customer who paid on November } \\5 .\end{array} \\\hline 31 & \text { Of the advertising paid for on November } 7 , \$ 1,500 \text { is not yet used. } \\\hline\end{array}$$

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Definitions:

Financial Markets

Marketplaces where individuals and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.

Market Risk Premium

The added financial return that an investor predicts when opting for a market portfolio with inherent risk over guaranteed risk-free assets.

Expected Return

The weighted average of all possible returns from an investment, with the weights being the probabilities of each outcome.

Beta

The assessment of a stock's price movements compared to the aggregate market.