Question

7. Assume December 31 is a Wednesday. Weld-Rite Company's wages are paid every Friday, and the weekly payroll (for five days) amounts to $6,000 To record the correct amount of expense for December, Weld-Rite makes the following entry on December 8. Race Car Company paid $105,600 for a four-year insurance policy on September 1 and recorded the $105,600 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Race Car Company make on December 31, the end of the accounting period (no previous adjustment has been made)? 9. The Blue Plum Company's Printing Supplies account had a beginning balance of $8.000. During the month purchases of printing supplies totaling $6,000 were debited to the Printing Supplies account If $4,000 worth of printing supplies is still on hand at month-end, what is the proper adjusting entry? 10. During the current accounting period, Malibar Farms Company paid $2,000 for advertising services in advance of receiving them. Prepaid Advertising was debited and Cash was credited for $2,000. At the end of the accounting period, three-fourths of the services paid for had been received. The proper adjusting entry is:

Answer 1

		Account titles and explanation	Debit	Credit
	7	Wages expense	$3,600		(6000/5*3)
		Wages payable		$3,600
		(wages expense booked for 3 days)
	8	Insurance expense	8800		(105600/48*4)
		Prepaid insurance		$8,800
		(insurance expense for 4 months booked)
	9	Printing supplies expense	$10,000		(8000+6000-4000)
		Printing supplies		$10,000
		(printing supplies expense booked)
	10	Advertising expense	$1,500		(2000*3/4)
		Prepaid advertising		$1,500
		(advertising expense booked)