Marathon Magazine Inc has the following unadjusted account b

Marathon Magazine, Inc., has the following unadjusted account balances, among others, in its trial balance at December 31 of the current year: Marathon Magazine, Inc. Partial Unadjusted Trial Balance December 31 Accounts Supplies on Hand Prepaid Rent Salaries Payable Unearned Subscription Fees Subscriptions Revenue Salaries Expense Supplies Expense Rent Expense Debit Credit $3660 $1920 $0 $13500 $312000 $142500 $620 $5360 a) Prepare the adjusting journal entry necessary to show the inventory supplies on hand at December 31st is $860 Date Description Debit Credit Dec 31 l b) Prepare the adjusting journal entry necessary to adjust Prepaid Rent at December 31st if the Prepaid Rent amount in the Partial Unadjusted Trail Balance above represents one years worth of rent that was paid in advance on August 1st Date Description Debit Credit Dec 31 L

Solution

(a) Adjusting journal entry for supplies:

Supplies on hand as per trial balance = 3660

Inventory supplies at 31st December = 860

Supplies to be adjusted = 3660 - 860 = 2800

We have to credit supplies by 2800 to reduce it to 860 and debit supplies expense, so entry will be:

12/31 Supplies expense 2800

To Supplies on hand 2800

(b) Adjusting journal entry for prepaid rent:

Prepaid rent as per trial balance = 1920

Rent for the current year (from August1 to December 31) = 1920 * 5/12 = 800

Remaining prepaid rent for next year = 1920 - 800 = 1120

So, we have to reduce 800 from prepaid rent hence it will be credited and debit item will be rent expense. Entry will be:

12/31 Rent expense 800

To Prepaid rent 800

(c) Adjusting journal entry for unearned subscription fees:

Unearned subscription fees as per trial balance = 13500

Earned subscription fee is 80% = 80% * 13500 = 10800

So, we have to debit 10800 from unearned subscription fee and crit item will be subscription revenue. So entry will be:

12/31 Unearned Subscription Fees 10800

To Subscriptions revenue 10800

(d) Adjusting journal entry for salaries earned but not paid:

Salaries payable as per trial balance = 0

Salaries payable but earned during the year = 9020

So, we will credit salaries payable by 9020 and debit item will be salaries expense. Entry will be:

12/31 Salaries expense 9020

To Salaries payable 9020