Mate Ease is an Internet dating service. All members pay in advance to be listed in the database. Advance payments are credited to an account entitled Unearned Member Dues. Adjusting entries are performed on a monthly basis. Adjusting entries are performed on a monthly basis. Below is an unadjusted trial balance dated December 31 of the current year. (Bear in mind that adjusting entries have already been made for the first 11 months, but not for December.)

Other Data
1. Records show that $25,200 of cash receipts originally recorded as unearned member dues had been earned as of December 31 of the current year.
2. The company purchased a six-month insurance policy on October 1 of the current year for $23,040.
3. On November 1 of the current year the company paid $26,280 for rent through January 31 of the upcoming year.
4. Office supplies on hand at December 31 amount to $528.
5. All computer equipment was purchased when the business first formed. The estimated life of the equipment at that time was three years (or 36 months).
6. On March 1 of the current year the company borrowed $108,000 by signing a 12-month, 10 percent note payable. The entire note, plus 12 months’ accrued interest, is due on March 1 of the upcoming year.
7. Accrued but unrecorded salaries at December 31 amount to $12,600.
8. Estimated income taxes expense for the entire year totals $19,200. Taxes are due in the first quarter of the upcoming year. 

Instructions
a. For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation).
b. Determine that amount at which each of the following accounts will be reported in the company’s balance sheet dated December 31.
1. Cash
2. Unexpired Insurance
3. Prepaid Rent
4. Office Supplies
5. Computer Equipment
6. Accumulated Depreciation: Computer Equipment
7. Accounts Payable
8. Notes Payable
9. Salaries Payable
10. Interest Payable
11. Income Taxes Payable
12. Unearned Member Duesc. Why doesn’t the company immediately record advance payments from customers as revenue?

Transcribed Image Text:

MATE EASE UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash Unexpired Insurance Prepaid rent... Office supplies Computer equipment Accumulated depreciation: computer equipment Accounts payable.. Notes payable... Interest payable Income taxes payable Unearned member dues Capital stock.... Retained earnings Client fees earned Advertising expense Insurance expense. Rent expense ***** Office supplies expense Internet connection expense Depreciation expense: computer equipment Salarles expense Interest expense Income taxes expense $203,400 15,360 17,520 2,592 129,600 $ 64,800 5,160 108,000 8,100 9,000 48,200 43,100 33,600 610,140 20,748 42,240 96,360 22,080 28,800 39,600 286,800 8,100 16,800 $930,000 $930,000