Problem:
Green Mountain Company of Montpelier, Vermont, publishes a monthly magazine featuring local restaurant reviews and upcoming social, cultural, and sporting events. Subscribers pat subscriptions either one year or two years in advance. Cash received from subscribers is credited to an account called Magazine Subscriptions Received in Advance. On December 31, 20x3, the end of the company's fiscal year, the balance of this account was $1,000,000. Expiration of subscriptions revenue is as follows: During 20x3 $200,000, during 20x4 $500,000, and during 20x5 $300,000.
Q1. An examination of the Prepaid Insurance accounts shows a balance of $4,112 at the end of an accounting period, before adjustment. Prepare entries in journal form to record the insurance expense for the period under the following independent assumptions:
1) An examination of the insurance policies shows unexpired insurance that costs $1,974 at the end of the period.
2) An examination of the insurance policies shows that insurance that costs $694 has expired during the period.
Q2. Hasterson has a five-day work week and plays salaries of $70,000 each Friday.
1) Make the adjusting entry required on July 31, assuming that August 1 falls on a Wednesday.
2) Make the entry to pay the salaries on August 3.