# Problem 3-1a

**Topics:**1981, 1973, 2007

**Pages:**2 (565 words)

**Published:**January 21, 2013

Dr Office Supplies Expense 12,760

Cr Office Supplies 12,760

b.) An analysis of the company's insurance policies provided the following facts: Policy A was purchased on April 1, 2010 for 24 months at the amount of $15,840. 15,840 / 24 = 660 per month

660 x 12 months = 7,920

Policy B was purchased on April 1, 2011 for 36 months at the amount of $13,068. 13,068 / 36 = 1,005.23 per month

1,005.23 x 9 months = 9,047

Policy C was purchased on August 1, 2011 for 12 months at the amount of $2,700. 2,700 / 12 = 225 per month

225 x 5 months = 1,125

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.) 7,920 + 9,047 + 1,125 = 18,092 adjustment

Dr Insurance Expense 18,092

Cr Prepaid Insurance 18,092

c.) The company has 15 employees, who earn a total of $2,100 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2011, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2012. 2,100 x 2 = 4,200 adjustment

Dr Salaries Expense 4,200

Cr Salaries Payable 4,200

*Note: The pay for New Year's Day is irrelevant, since it falls in the next year.

d.) The company purchased a building on January 1, 2011. It cost $855,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $27,000. Dr...

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