(a) Phillip Limited has performed services for $10,000 during the month of June 2020. The cash amount of $10,000 was received by Phillip Limited in advance from the client on 1 May, 2020 and was recorded as a liability (revenue received in advance). Record the adjusting journal as at 30 June 2020 

(b) If an adjusting journal in 1(a) was not recorded, advise the impact on profit, assets and liabilities. You may use the terms overstated, understated or no effect to describe the impact. 

2. On the 1 March 2020 Phillip Limited paid insurance premiums of $18,000 for 12 months to 28 February 2021. The entire amount was recorded as a prepaid asset when the amount was paid. No adjustments have been made to the prepaid asset account since 1 March 2020, it is now 30 June 2020 (balance date) process the necessary adjusting journal.

Answer rating: 100% (QA)

1 a For services performed in June 2020 the advance was already received on 1st May 2020 Hence adjus... View the full answer