A review of the ledger of Ewoks Company at December 31, 2001, produces these data pertaining to the preparation of annual adjusting entries:

1. Prepaid Insurance $12,300: The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2000, for $9,000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2001, for $4,800. This policy has a term of 2 years.

2. Unearned Subscription Revenue $49,000: The company began selling magazine subscriptions on October 1, 2001 on an annual basis. The selling price of a subscription is $50. A review of subscription contracts reveals the following:

3. Notes Payable, $40,000: This balance consists of a note for 6 months at an annual interest rate of 9%, dated September 1.

4. Salaries Payable $0: There are eight salaried employees. Salaries are paid every Fri- day for the current week. Five employees receive a salary of $600 each per week, and three employees earn $700 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
Instructions Prepare the adjusting entries at December 31, 2001.

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Subscription Start Date Number of Subscriptions October 1 November 1 200 300 December 1 480 980