The following information relates to the Better Lawns and Gardens Company at the end of December 2020.
Question:
The following information relates to the Better Lawns and Gardens Company at the end of December 2020.
The company is a publisher of a monthly lawn and garden magazine. The company’s revenue comes from two main sources: 1.Advertising sold to businesses that manufacture lawn and garden products, and 2. Customers who subscribe to the magazine. The company’s accounting period follows a calendar year of January through December.
1. Employees are paid every Friday for the five-day week ending on that day. Salaries amount to $7,500 per week. This year, the company’s current operating year concluded on Thursday, December 31, 2020.
2. A note for $4,800 was received from an advertising customer for a special onetime advertising transaction on September 1, 2020. The note is due in one year, plus interest at 9%.
3. On October 1, 2020, the company borrowed $60,000 cash by signing a note payable due in one year at 6% interest.
4. An insurance policy was renewed at a total premium cost of $9,600 paid in full on November 1, 2020. The premium is for 12 months beginning November 1, 2020.
5. On November 15, 2020, cash of $82,200 was received from subscribers (customers) for a special 24 month prepaid subscription beginning on December 1, 2020. The transaction was recorded by a debit to Cash and a credit to Unearned Subscription Revenue.
6. The Supplies account showed a balance of $780 at the beginning of 2020. Supplies costing $14,250 were purchased during 2020 and debited to the asset accountsupplies. An inventory count of supplies indicated $1,695 was still on hand at December 31, 2020.
Required:
Prepare in journal entry form, the necessary year end December 31, 2020 adjustments based on the information above.
Note: No adjusting entries have been made during the year.
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach