E3-5 Book Finanancial Accounting Drew Carey Company has the following balances in selected accounts on December 31, 2008. Accounts Receivable $ -0- Accumulated DepreciationEquipment -0- Equipment 7,000 Interest Payable -0- Notes Payable 10,000 Prepaid Insurance 2,100 Salaries Payable -0- Supplies 2,450 Unearned Consulting Revenue 40,000 All the accounts have normal balances.The information below has been gathered at December 31, 2008. 1. Drew Carey Company borrowed $10,000 by signing a 12%, one-year note on September 1, 2008. 2. A count of supplies on December 31, 2008, indicates that supplies of $800 are on hand. 3. Depreciation on the equipment for 2008 is $1,000. 4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2008. 5. On December 1, 2008, Drew Carey collected $40,000 for consulting services to be performed from December 1, 2008, through March 31, 2009. 6. Drew Carey performed consulting services for a client in December 2008. The client will be billed $4,200. 7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2008. 124 Chapter 3 Adjusting the Accounts Compute cash and accrual accounting income. (SO 2) Identify the type of adjusting entry needed. (SO 4) Instructions Prepare adjusting entries for the seven items described on page 124