A review of the ledger of obi company at december 31 2010, Ask an Expert

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A review of the ledger of Obi Company at December 31, 2010, produces the following data pertaining to the preparation of annual adjusting entries.

1. Prepaid Insurance $9,900. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2009, for $7,200.

The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2010, for $4,500.This policy has a term of 2 years.

2. Unearned Subscriptions $45,000.The company began selling magazine subscriptions in 2010 on an annual basis. The magazine is published monthly. The selling price of a subscription is $45. A review of subscription contracts reveals the following.

3. Notes Payable $100,000.This balance consists of a note for 9 months at an annual interest rate of 9%, dated November 1.

4. Salaries Payable $0.There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $700 each per week, and three employees earn $500 each per week. Assume December 31 is a Tuesday. Employees do not work weekends.

All employees worked the last 2 days of December.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91874114

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