Refer to the transaction information provided in E3-4 for Action Quest Games. Assume that prepaid expenses are initially recorded as expenses (not as assets as in E3-4). Assume that revenues collected in advance of the work are initially recorded as revenue (not as liabilities as in E3-4).

Instructions

(a) For each transaction:

(1) Prepare the journal entry to record the initial transaction, and

(2) Prepare the adjusting journal entry required on December 31, 2014.

(b) Post each of these entries to T accounts and calculate the fi nal balance in each account. (Note: Posting to the

Cash account is not necessary.)

(c) Compare your balances in (b) above with those obtained in E3-4, part (b). Comment on your findings.