Mate Ease is an Internet dating service. All members pay in advance to be listed in the database. Advance payments are credited to an account entitled Unearned Member Dues. Adjusting entries are performed on a monthly basis. Adjusting entries are performed on a monthly basis. Below is an unadjusted trial balance dated December 31 of the current year. (Bear in mind that adjusting entries have already been made for the first 11 months, but not for December.) MATE EASE UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash $203,400 Unexpired insurance Prepaid rent Office supplies 15,360 17,520 2,592 129,600 Computer equipment Accumulated depreciation: computer equipment Accounts payable Notes payable Interest payable Income taxes payable Unearned member dues $64,800 5,160 108,000 8,100 9,000 48,200 Capital stock Retained earnings 43,100 33,600 Client fees earned 610,140
Mate Ease is an Internet dating service. All members pay in advance to be listed in the database. Advance payments are credited to an account entitled Unearned Member Dues. Adjusting entries are performed on a monthly basis. Adjusting entries are performed on a monthly basis. Below is an unadjusted trial balance dated December 31 of the current year. (Bear in mind that adjusting entries have already been made for the first 11 months, but not for December.) MATE EASE UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash $203,400 Unexpired insurance Prepaid rent Office supplies 15,360 17,520 2,592 129,600 Computer equipment Accumulated depreciation: computer equipment Accounts payable Notes payable Interest payable Income taxes payable Unearned member dues $64,800 5,160 108,000 8,100 9,000 48,200 Capital stock Retained earnings 43,100 33,600 Client fees earned 610,140
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Records show that $25,200 of cash receipts originally recorded as unearned member
dues had been earned as of December 31 of the current year.
2. The company purchased a six-month insurance policy on October 1 of the current
year for $23,040.
3. On November 1 of the current year the company paid $26,280 for rent through
January 31 of the upcoming year.
4. Office supplies on hand at December 31 amount to $528.
5. All computer equipment was purchased when the business first formed. The estimated
life of the equipment at that time was three years (or 36 months).
6. On March 1 of the current year the company borrowed $108,000 by signing a 12-
month, 10 percent note payable. The entire note, plus 12 months' accrued interest, is
due on March 1 of the upcoming year.
7. Accrued but unrecorded salaries at December 31 amount to $12,600.
8. Estimated income taxes expense for the entire year totals $19,200. Taxes are due in
the first quarter of the upcoming year.
Adjusting Entries and Determining Account Balances
Mate Ease is an Internet dating service. All members pay in advance to be listed in the
database. Advance payments are credited to an account entitled Unearned Member Dues.
Adjusting entries are performed on a monthly basis. Adjusting entries are performed on a
monthly basis. Below is an unadjusted trial balance dated December 31 of the current year.
(Bear in mind that adjusting entries have already been made for the first 11 months, but not
for December.)
MATE EASE
UNADJUSTED TRIAL BALANCE
DECEMBER 31, CURRENT YEAR
Cash
$203,400
Unexpired insurance
Prepaid rent
Office supplies
Computer equipment
Accumulated depreciation: computer equipment
Accounts payable
Notes payable
Interest payable
Income taxes payable
15,360
17,520
2,592
129,600
1. For each of the numbered paragraphs, prepare the necessary adjusting entry (omit
explanation).
2. Using T accounts, determine the new balances of the accounts affected by the
adjusting journal entries.
3. Prepare the adjusted trial balance in good form (TIP: using the new account balances).
$64,800
5,160
108,000
8,100
9,000
Unearned member dues
48,200
Capital stock
Retained earnings
43,100
33,600
Client fees earned
610,140
Advertising expense
Insurance expense
20,748
42,240
96,360
Rent expense
Office supplies expense
Internet connection expense
22,080
28,800
Depreciation expense: computer equipment
Salaries expense
39,600
286,800
Interest expense
8,100
Income taxes expense
16,800
$930,000 $930,000
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