Problem 3-4B
A review of the ledger of Yoda Company at December 31, 2008, produces the following data pertaining to the preparation of annual adjusting entries.
1. Prepaid Insurance $8,600. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2007, for $6,000.The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2008, for $3,600.This policy has a term of 2 years.
2. Unearned Subscriptions $49,000.The company began selling magazine subscriptions in 2008 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 Date -----Number oSubscriptions
October 1 ---------------------200
November 1 -------------------300
December 1 -------------------480
--------------------------------980
3. Notes Payable $60,000.This balance consists of a note for 6 months at an annual interest rate of 9%, dated September 1.
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 $750 each per week. December 31 is a Wednesday. Employees do not work weekends.Allemployees worked the last 3 days of December.
Instructions
Prepare the adjusting entries at Dec 31, 2008
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