Consider the following two independent situations:
1. On June 1, Brown Company received $4,800 cash for a two-year subscription to its monthly magazine. The term of the subscription begins on June 1. Make the entry to record the receipt of the subscription on June 1. Also make the necessary adjusting entry at December 31. The company uses an account called Unearned Subscription Revenue.
2. Clark Company pays its employees every Friday for a five-day workweek. Salaries of $200,000 are earned equally throughout the week. December 31 of the current year is a Tuesday.
a. Make the adjusting entry at December 31.
b. Make the entry to pay the week's salaries on Friday, January 3, of the next year. Assume that all employees are paid for New Year's Day.
June 1 Cash 4,800
Unearned Subscription Revenue 4,800
Dec. 31 ...
This solution is comprised of a detailed explanation to prepare the adjusting entries for Brown Company and Clark Company.