Textbook Problem

On December 31, the end of the year, the accountant for Fireside Magazine was called away suddenly because of an emergency. However, before leaving, the accountant jotted down a few notes pertaining to the adjustments. Journalize the necessary adjusting entries. Assume that Fireside Magazine uses the periodic inventory system.

a–b. A physical count of inventory revealed a balance of $199,830. The Merchandise Inventory account shows a balance of $202,839.

c. Subscriptions received in advance amounting to $156,200 were recorded as Unearned Subscriptions. At year-end, $103,120 has been earned.

d. Depreciation of equipment for the year is $12,300.

e. The amount of expired insurance for the year is $1,612.

f. The balance of Prepaid Rent is $2,400, representing four months’ rent. Three months’ rent has expired.

g. Three days’ salaries will be unpaid at the end of the year; total weekly (five days’) salaries are $4,000.

h. As of December 31, the balance of the supplies account is $1,800. A physical inventory of the supplies was taken, with an amount of $920 determined to be on hand.