177 ms. For ent does EXERCISE 4.4 Preparing Adjusting Entries for Unrecorded Revenue and Expenses LO 2, 3 ed from for pur Exercises echt The law firm of Dale & Clark prepares its financial statements on a monthly basis. Among the items requiring adjustment at December 31 are the following: 1. Salaries to staff attorneys are paid on the fifteenth day of each month. Salaries accrued since December 15 amount to-$17,800 and have not yet been recorded. 2. The firm is defending J. R. Stone in a civil lawsuit. The agreed-upon legal fees are $2,100 per day while the trial is in progress. The trial has been in progress for nine days during Decem- ber and is not expected to end until late January. No legal fees have yet been billed to Stone. (Legal fees are recorded in an account entitled Legal Fees Earned.) a. Prepare the two adjusting entries required at December 31 to record the accrued salaries ex- pense and the accrued legal fees revenue. b. Assume that salaries paid to staff attorneys on January 15 amount to $35,000 for the period December 15 through January 15. How much of this amount is considered salaries expense of January? (Although not required, you may wish to prepare the journal entry at January 15 to record payment of staff attorneys.). c. Assume that on January 29, Dale & Clark receives $60,900 from J. R. Stone in full settlement of legal fees for services in the civil lawsuit. What portion of this amount constitutes revenue eared in January? (Although not required, you may wish to prepare the journal entry at Jan- uary 29 to record receipt of the $60,900.) ich re- ording ces are in the OLE reni. com- When Torretti Company began business on August 1, it purchased a one-year fire insurance pol- icy and debited the entire cost of $7,200 to Unexpired Insurance. Torretti adjusts its accounts at the end of each month and closes its books at the end of the year. EXERCISE 4.5 Distinction Between Adjusting and Closing Process