Mate Ease is an Internet dating service All members pay

Mate Ease is an Internet dating service. All members pay in advance to be listed in the
database. Advance payments are credited to an account entitled Unearned Member Dues.
Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated
December 31, year 1, follows. (Bear in mind that adjusting entries have already been made for
the first 11 months of year 1, but not for December.)

Other Data

1. Records show that $25,200 of cash receipts originally recorded as unearned member dues
had been earned as of December 31, year 1.

2. The company purchased a six-month insurance policy on October 1, year 1, for $23,040.

3. On November 1, year 1, the company paid $26,280 for rent through January 31, year 2.

4. Office supplies on hand at December 31 amount to $528.

5. All computer equipment was purchased when the business first formed. The estimated life of
the equipment at that time was three years (or 36 months).

6. On March 1, year 1, the company borrowed $108,000 by signing a 12-month, 10 percent note
payable. The entire note, plus 12 months' accrued interest, is due on March 1, year 2.

7. Accrued but unrecorded salaries at December 31 amount to $12,600.

8. Estimated income taxes expense for the entire year totals $19,200. Taxes are due in the first
quarter of year 2.

Instructions

a. For each of the numbered paragraphs, prepare the necessary adjusting entry (including an
explanation).

b. Determine that amount at which each of the following accounts will be reported in the
company's balance sheet dated December 31, year 1.

1. Cash

2. Unexpired Insurance

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 3. Prepaid Rent

4. Office Supplies

5. Computer Equipment

6. Accumulated Depreciation: Computer Equipment

7. Accounts Payable

8. Notes Payable

9. Salaries Payable

10. Interest Payable

11. Income Taxes Payable

12. Unearned Member Dues

c. Why doesn't the company immediately record advance payments from customers as
revenue?

Mate Ease is an Internet dating service All members pay

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members-pay/

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