Question

Spring Hills, Inc. has prepared a 2019 year-end trial balance. Prepare to adjust journal entries as needed assuming adjusting entries are made annually on 12/31/2019.
1. Spring Hills employees work Monday through Friday, and salaries of $2,400 for five workdays per week are paid each Friday. Spring Hills' year-end falls on Tuesday.

2. On December 31, 2019, Spring Hills reasonably estimates a bad debt expense for the year of $21,000.

3. Interest has accrued on a note payable with a face value of $20,000, the annual interest rate is 6%, issued on May 1. The analysis of the accounts shows that the equipment depreciates $200 per month.

4. On June 1, 2019, cash of $54,000 was received from subscribers (customers) for a 36-month subscription period beginning on that date. The receipt was recorded by a debit to Cash and a credit to Unearned Subscription Revenue. Prepare to adjust entries on 12/31/2019.

5.The analysis of the accounts shows that the equipment depreciates $200 per month.

Answer 1

Date	Account title	Debit	credit
December 31 2019
1	Salaries and wage expense	960
	Salaries and wages payable		960
	[Being salaries accrued for 2days (Monday & Tuesday) out of 5days week :2400*2/5=960
2	Bad debt expense	21000
	Allowance for doubtful account		21000
3-a	Interest expense	800
	Interest payable		800
	[Being interest accrued for 8 months (1May-31Dec) :20000*.06*8/12]
4	Unearned subscription revenue	10500
	Subscription revenue		10500
	[Being revenue earned for 7 months (1June -31Dec ) :54000*7/36=10500]
5	Depreciation expense	2400
	Accumulated depreciation-equipment (200*12)		2400