Date Term (in months) Monthly Rent Number of Leases Contract Date Amount Number
ID: 2363928 • Letter: D
Question
Date Term
(in months)
Monthly Rent Number of
Leases
Contract
Date
Amount Number of
Magazine
Issues No. Date Account Titles and Explanation Debit Credit 1. Salaries and Wages Payable 5 x $950x 2/5 = $1,900 3 x $680x 2/5 = 816 = $2,716 2. Rent Revenue 4x $5,184x 2 = $41,472 2x $8,355x 1 = 16,710 = $58,182 3. Prepaid Advertising A650 Problem 3-4A A review of the ledger of D. J. Moore Company at December 31, 2012, produces the following data pertaining to the preparation of annual adjusting entries.
1. Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $950each per week, and three employees earn $680each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December.
2. Unearned Rent Revenue $224,676. 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.
Date Term
(in months)
Monthly Rent Number of
Leases Nov. 1 6 $5,184 4 Dec. 1 6 $8,355 2
3. Prepaid Advertising $16,301. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as follows.
Contract
Date
Amount Number of
Magazine
Issues A650 May 1 $7,124 13 B974 Oct. 1 9,177 21
The first advertisement runs in the month in which the contract is signed.
4. Notes Payable $122,000. This balance consists of a note for one year at an annual interest rate of9%, dated June 1.
No. Date Account Titles and Explanation Debit Credit 1. Dec. 31 2. Dec. 31 3. Dec. 31 4. Dec. 31
1. Salaries and Wages Payable 5 x $950x 2/5 = $1,900 3 x $680x 2/5 = 816 = $2,716 2. Rent Revenue 4x $5,184x 2 = $41,472 2x $8,355x 1 = 16,710 = $58,182 3. Prepaid Advertising A650
Explanation / Answer
1. Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $950each per week, and three employees earn $680each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December. Emp Salary per week = 5*$950+ 3*$680 = $6,790 So on 31 Dec, Salary Due for Dec is for 2 days (Mon-Tue) & week has 5 days. So 0n 31 Dec, Salary Payable is 2* $6,790/5 = $2,716 31 Dec Salary Payable Dr 2716 Salary Accrued Cr 2716 2. Unearned Rent Revenue $224,676. 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. Nov. 1-Dec 31 : 2m*$5,184*4Lease = $41,472 Dec. 1-Dec31: 1m*$8,355*2Lease = $16,710 SO Total Rent realised upto Dec 31 = 41472+16710 = $58,182 31 Dec Unearned Rent Revenue Dr $58,182 Rental Income Cr $58,182 3. Prepaid Advertising $16,301. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as follows. The first advertisement runs in the month in which the contract is signed. PrePaid Advtg Bal is SUm of A650 ($7,124) & A974 ($9,177) = 16301. SO it indicates a monthly expense of advtg. 31 Dec Advtg Exp Dr 16301 Prepaid Advtg Cr 16301 4. Notes Payable $122,000. This balance consists of a note for one year at an annual interest rate of 9%, dated June 1. Int Payable on Note Payable for Jun 1 to 31 Dec ie 7 month = 7*9%*122000/12 = $6,405 31 Dec Int exp Dr 6405 Int Payable Cr 6405
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