Where possible, record the original transaction so that no adjusting entry would be necessary at the… 1 answer below »

Jupiter Publishing Company began operations on 2010 December 1. The company’s bookkeeper intended to use the cash basis of accounting. Consequently, the bookkeeper recorded all cash receipts and disbursements for items relating to operations in revenue and expense accounts. No adjusting entries were made prior to preparing the financial statements for December.

Dec. 1 Issued capital stock for USD 300,000 cash.

3 Received USD 144,000 for magazine subscriptions to run for two years from this date. The magazine is published monthly on the 23rd.

4 Paid for advertising to be run in a national periodical for six months (starting this month). The cost was USD 36,000.

7 Purchased for cash an insurance policy to cover a two-year period beginning December 15, USD 24,000.

12 Paid the annual rent on the building, USD 36,000, effective through 2011 November 30.

15 Received USD 216,000 cash for two-year subscriptions starting with the December issue.

15 Salaries for the period December 1–15 amounted to USD 48,000. Beginning as of this date, salaries will be paid on the 5th and 20th of each month for the preceding two-week period.

20 Salaries for the period December 1–15 were paid.

23 Supplies purchased for cash, USD 21,600. (Only USD 1,800 of these were subsequently used in 2010.)

27 Printing costs applicable equally to the next six issues beginning with the December issue were paid in cash, USD 144,000.

31 Cash sales of the December issue, USD 84,000.

31 Unpaid salaries for the period December 16–31 amounted to USD 22,000.

31 Sales on account of December issue, USD 14,000.

a. Prepare journal entries for the transactions as the bookkeeper prepared them.

b. Prepare journal entries as they would have been prepared under the accrual basis. Where the entry is the same as under the cash basis, merely indicate “same”. Where possible, record the original transaction so that no adjusting entry would be necessary at the end of the month. Ignore explanations.

"Is this question part of your assignment? We can help"

ORDER NOW