Preparing an Adjusted Trial Balance Before any adjusting entries were made, the company prepared the following trial balance as of December 31:

In order to make the adjusting entries, the following information has been assembled:

a. The notes receivable were issued on June 1. The annual interest rate on the notes is 12%. Interest is to be received each year on May 31; accordingly, no interest has been received.

b. The unearned fee revenue represents cash received in advance on February 1. This $270,000 relates to a three-year contract which began on February 1. It is expected that the fees will be earned evenly over the three-year contract period. As of December 31, no revenue had yet been recognized on this contract.

c. The prepaid rent represents cash paid in advance on October 1. This $216,000 relates to a five-year rental agreement that began on October 1. As of December 31, no expense had yet been recognized in association with this rental agreement.

d. As of December 31, unpaid (and unrecorded) wages totaled $22,000.
(1) Prepare the necessary adjusting journal entries and (2) prepare an adjusted trial balance.

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Cash Notes Receivable Prepaid Rent Building Accounts Payable Unearned Fee Revenue Capital Stock. Retained Earnings Dividends. Fee Revenue Wages Expense Utilities Expense Totals Debit $ 68,000 126,000 216,000 Credit 290,000 $ 150,000 270,000 150,000 100,000 17,000 370,000 244,000 79,000 $1,040,000 $1,040,000