The data below concerns adjustments to be made at Ramos Company.
a. On August 1, 2016, the firm signed a six-month advertising contract with a trade magazine and paid the entire amount, $17,700, in advance. Prepaid Advertising had a balance of $17,700 on December 31, 2016.
b. On December 31, 2016, an inventory of supplies showed that items costing $3,040 were on hand. The balance of the Supplies account was $11,120.
c. A depreciation schedule for the firm’s store equipment shows that a total of $9,800 should be charged off as depreciation for 2016.
d. On December 31, 2016, the firm owed salaries of $4,400 that will not be paid until January 2017.
e. On December 31, 2016, the firm owed the employer’s social security (6.2 percent) and Medicare (1.45 percent) taxes on all accrued salaries.
f. On December 1, 2016, the firm received a five-month, 6 percent note for $5,500 from a customer with an overdue balance.
1. Record the adjusting entries in the general journal as of December 31, 2016. Use 25 as the first journal page number. Include descriptions.
2. Record reversing entries in the general journal as of January 1, 2017. Include descriptions.
Analyze: After the adjusting entries have been posted, what is the balance of the Prepaid Advertising account on December 31?