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A review of the ledger of Khan Company at 31 December 2016 produces the following data pertaining to the preparation of annual adjusting entries. 1.
A review of the ledger of Khan Company at 31 December 2016 produces the following data pertaining to the preparation of annual adjusting entries.
1. | Prepaid insurance $9,800. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on 1 July 2015, for $6,000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on 1 January 2016 for $4,800. This policy has a term of 2 years. | |
2. | Unearned subscriptions $49,000. The company began selling magazine subscriptions in 2016 on an annual basis. The magazine is published monthly. The selling price of a subscription is $50. A review of subscription contracts reveals the following: |
Subscription | Number of | |
date | subscriptions | |
1 October | 200 | |
1 November | 300 | |
1 December | 480 | |
980 |
3. | Notes payable $40,000. This balance consists of a note for 6 months at an annual interest rate of 9%, dated 1 September. | |
4. | Salaries payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $500 each per week, and three employees earn $800 each per week. 31 December is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. |
Required Prepare the adjusting entries as at 31 December 2016. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
No. | Date | Accounts | Debit | Credit |
1. | Dec. 31 | |||
2. | Dec. 31 | |||
3. | Dec. 31 | |||
4. | Dec. 31 | |||
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