A review of the ledger of Garner Company at December 31, 2014, produces these data pertaining to the preparation of annual adjusting entries.
1. Prepaid Insurance $16,400. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on January 1, 2013, for $11,400. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on July 1, 2014, for $8,800. This policy has a term of 2 years.
2. Unearned Rent Revenue $450,000. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

3. Notes Payable $20,000. This balance consists of a note for 8 months at an annual interest rate of 9%, dated August 1.
4. Salaries and Wages Payable $0. There are six salaried employees. Salaries are paid every Friday for the current week. Four employees receive a salary of $480 each per week, and two employees earn $600 each per week. December 31 is a Thursday. Employees do not work weekends. All employees worked the last 4 days of December.
Prepare the adjusting entries at December 31,2014.

  • CreatedApril 07, 2014
  • Files Included
Post your question