Events Concerning the Elton Company for 2010 Are Described Below $\$ 3,600$

question 66

Essay

Events concerning the Elton Company for 2010 are described below:
a. OnSeptember 1,2010 , a two-year comprehensive insurance policy was purchased for $\$ 3,600$ . The payment was debited to Prepaid Insurance.
OnDecember 1,2010, a customer paid $\$ 950$ in advance for services to be performed in Janury of 2011 . The payment was credited to Uneaned Revenue.
On Jamuary 1,2010, the office supplies ac count had a $\$ 250$ balance. Suppliescosting $\$ 2,500$ were purchased during the ye ar. At December 31, an invent out count showed $\$ 100$ of supplies on hand.
On December $31,2010, \$ 3,200$ of unped employee salaries had accumulated. No entry for these salaries has been recorded. Straight-line depreciation is recorded only at year-end and is being used for a building that was purchased at the beginning of 2005 for $\$ 25,000$ , with an expected life of 30 years and an estimated resichial value of $\$ 2,500$ .
The income tax rate is $30 \%$ on current income. Pretax income before the above adjusting entries was $\$ 38,700$ .
Required:
Prepare the appropriate December 31, 2010, adjusting entry for each item, or indicate that an adjusting entry is not necessary.Assume that Elton's transactions were initially recorded in real (balance sheet)accounts unless otherwise indicated.

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Definitions:

Receivables

Funds that are owed to a company by its customers or clients for goods or services already delivered.

Payables

Short-term liabilities of a company, representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.

Control Accounts

General Ledger accounts that summarize the balances of numerous subsidiary accounts, used to consolidate and reconcile details.

Computerized Accounting System

An accounting system that utilizes software to record, store, and process financial transactions and data.