E3-5 Drew Carey Company has the following balances in selected accounts on December 31, 2008.
| Accounts receivable | - |
| Accumulated Depreciation - Equipment | - |
| Equipment | 7,000 |
| Interest payable | - |
| Notes payable | 10,000 |
| Prepaid insurance | 2,100 |
| Salaries payable | - |
| Supplies | 2,450 |
| Unearned consulting revenue | 40,000 |
All the accounts have normal balances.The information below has been gathered at December 31, 2008.
1. Drew Carey Company borrowed $10,000 by signing a 12%, one-year note on September 1, 2008.
2. A count of supplies on December 31, 2008, indicates that supplies of $800 are on hand.
3. Depreciation on the equipment for 2008 is $1,000.
4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2008.
5. On December 1, 2008, Drew Carey collected $40,000 for consulting services to be performed from December 1, 2008, through March 31, 2009.
6. Drew Carey performed consulting services for a client in December 2008. The client will be billed $4,200.
7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding
5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2008.
Instructions: Prepare adjusting entries for the seven items described on page 124.
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