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).
(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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