On September 28,2018,Benson Consulting Signs a Contract with Commercial Cleaning

question 101

Essay

On September 28,2018,Benson Consulting signs a contract with Commercial Cleaning Services.Commercial Cleaning will provide 6 months of office cleaning services for $2,000 per month.Benson Consulting pays $12,000 cash to Commercial Cleaning on September 28,2018.Cleaning services will begin on October 1,2018.Complete the following requirements for Benson Consulting.
(1)Prepare the journal entries for September 28,2018 and December 31,2018 (the end of Benson's fiscal year).Make proper journal entries (omit explanations).Deferred expenses are treated initially as assets.
(2)If Benson fails to record the December 31,2018 adjusting entry,what is the effect on net income,income statement account(s)and balance sheet account(s)?
(3)Why is it important for companies to record adjusting entries?

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Definitions:

Labor

Human endeavor, incorporating both the physical and the mental, aimed at producing goods and services.

Demand Curve

A graphical representation of the demand function, showing the relationship between the price of a good and the quantity demanded, typically downward-sloping.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at different prices.

Profit-Maximizing Output

The point of production where a company reaches its maximum possible profit.