[goofeycooper09]

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

1. Prepaid Insurance $15,800: The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2009, for $10,140. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2010, for $8,680. This policy has a term of 2 years.

2. Unearned Subscription Revenue $26,890: The company began selling magazine subscriptions on October 1, 2010 on an annual basis. The selling price of a subscription is $30. A review of subscription contracts reveals the following.


SUBSCRIPTION START DATE NUMBER OF SUBSCRIPTIONS
OCTOBER 1




3. Notes Payable, $44,800: This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1.


4. Salaries Payable $0: There are 9 salaried employees. Salaries are paid every Friday for the current week. 6 employees receive a salary of $620 each per week, and 3 employees earn $750 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.


Prepare the adjusting entries at December 31, 2010.

my unsure solution:

1. since this is a two separate insurance policy I'm lost... at first I only worked with each individual policy informations and then I add both but that is wrong.(10140/36=282(round-up)+8680/24=362 =644) so now I'm thinking about dividing 15800 by 36 and then 24 and then add.(15800/36=439 + 15800/24=658 =1097)
insurance expenses debit 1097
prepaid insurance credit 1097

2. 1120 x 30=33600-26890=6710
unearned subscription revenue debit 6710
subscription revenue credit 6710
-or-
unearned subscrition rev. debit 26890
sub. rev. credit 26890

3. 44800 x 7% x 6/12=1568/3=522.6666=523
interest expenses debit 523
interest payable credit 523

4. (620 x 3=1860 )+ (750 x 3=2250) =4110
salaries expenses debit 4110
salaries payable credit 4110

*****HELP PLEASE*****

[morgaine300]

1. since this is a two separate insurance policy I'm lost... at first i only worked with each individual policy informations and then i add both but that is wrong.(10140/36=282(round-up)+8680/24=362 =644) so now I'm thinking about dividing 15800 by 36 and then 24 and then add.(15800/36=439 + 15800/24=658 =1097)
insurance expenses debit 1097
prepaid insurance credit 1097

The accounts are correct. The dollar amount you are making difficult. The fact that there are two does not make it harder -- it simply means you have more work to do. (As though it were two separate entries.) You started with the right idea... I don't know what you did with that 15800 or even where you got that number, so we won't discuss that. :p In this particular case, you could add them together and divide down to monthly periods and go from there. But not a good habit cause it won't always work.

What you're doing wrong is trying to use one month. This is then end of 2010. You are not doing entries for just one month. You're doing entries for the entire year. That should be a big clue right there. And it should make the vehicle one easy. The building one is also easy if you let it be. Yes, it was purchased in July of 2009. But 2009 is gone, done and over with. We're in 2010 and you still need to charge the whole year. How much is a full year of that one?

2. 1120 x 30=33600-26890=6710
unearned subscription revenue debit 6710
subscription revenue credit 6710
-or-
unearned subscrition rev. debit 26890
sub. rev. credit 26890

You left out some info on this one so I don't know. I wasn't sure if I should just treat that 26890 as being for one full year, all started on 10/1 or not... but looking at your work, I see the missing info is important. The accounts are correct... just don't know about the dollar amount.

3. 44800 x 7% x 6/12=1568/3=522.6666=523
interest expenses debit 523
interest payable credit 523

Common mistake. You thought Dec - Oct: 12 - 10 = 2 months. Not when October is the beginning of the month and December is the end of the month. That doesn't work and it's a bad idea to think that way. Just count the months: Oct, Nov, Dec. But otherwise, right idea. (And correct accounts.)

4. (620 x 3=1860 )+ (750 x 3=2250) =4110
salaries expenses debit 4110
salaries payable credit 4110

Two things wrong here. One is the kind of thing you want to kick yourself over. There are SIX employees making 620. ;)

Now... after you straighten out that little problem... it won't be the full amount. The answer to that first part is for a full week. But Dec 31 is on Wednesday.

Overall not a bad job. You're not near as lost as you think you are.