The making ethical decisions box "should you stay or should you go? " addresses a dilemma worthy of consideration. it describes: ethical decisions that need to be considered when employees leave a faltering business to start their own, eventually competing against their previous employer. the slow death of a business and how important it is to delay payments, sell off assets and do everything possible to save a failing business except dismissing employees who need their jobs for survival. the unethical and disloyal decision to leave your family business and start your own, taking with you all the family business's trade secrets. an unethical situation where the business owner's need for capital causes him/her to delay all payments to suppliers for 120 days, forcing several of his close business relationships out of business.

Required prepare the necessary adjusting entries in the general journal as of december 31, assuming the following: on september 1, the company entered into a prepaid equipment maintenance contract. birch company paid $3,400 to cover maintenance service for six months, beginning september 1. the payment was debited to prepaid maintenance. supplies on hand at december 31 are $3,900. unearned commission fees at december 31 are $7,000. commission fees earned but not yet billed at december 31 are $3,500. (note: debit fees receivable.) birch company's lease calls for rent of $1,600 per month payable on the first of each month, plus an annual amount equal to 1% of annual commissions earned. this additional rent is payable on january 10 of the following year. (note: be sure to use the adjusted amount of commissions earned in computing the additional rent.)

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On january 15, the end of the first biweekly pay period of the year, north company’s payroll register showed that its employees earned $32,000 of sales salaries. withholdings from the employees’ salaries include fica social security taxes at the rate of 6.2%, fica medicare taxes at the rate of 1.45%, $3,000 of federal income taxes, $772 of medical insurance deductions, and $260 of union dues. no employee earned > $7,000 in this first period. prepare the journal entry to record north company’s january 15 (employee) payroll expenses and liabilities.