The general ledger of Tempo Plastics, Inc., at June 30, 19X3, the end of the company's fiscal year, includes the following account balances before adjusting entries. Parentheses indicate a debit balance.

The additional data needed to develop the adjusting entries at June 30 are as follows:

a. The \(\$ 45,000\) balance in Notes Payable, Short-Term consists of two notes. The first note, with a principal amount of \(\$ 15,000\), was issued on January 31. It matures six months from date of issuance and was discounted at 8 percent. The second note was issued on April 22 for a term of 90 days. It bears interest at 9 percent. It was not discounted. Interest on this note will be paid at maturity.

b. The long-term debt is payable in annual installments of \(\$ 40,000\) with the next installment due on July 31. On that date, Tempo will also pay one year's interest at 7 percent. Interest was last paid on July 31 of the preceding year.

c. Gross salaries for the last payroll of the fiscal year were \(\$ 5,044\). Of this amount, employee payroll taxes payable were \(\$ 1,088\), and salary payable was \(\$ 3,956\).

d. Employer payroll taxes payable were \(\$ 876\), and Tempo's liability for employee health insurance was \(\$ 1,046\).

e. Tempo estimates that vacation pay expense is 4 percent of gross salaries.

f. On February 1 the company collected one year's rent of \(\$ 6,000\) in advance.
g. At June 30, Tempo is the defendant in a \(\$ 300,000\) lawsuit, which the company hopes to win.
However, the outcome is uncertain. Report this contingent liability in the appropriate manner.
\section*{Required}
1. Open the listed accounts, inserting their unadjusted June 30 balances.
2. Journalize and post the June 30 adjusting entries to the accounts opened. Key adjusting entries by letter.
3. Prepare the liability section of the balance sheet at June 30 .
Using payroll register, recording a payroll (Obj. 5)

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Notes Payable, Short-Term.......... $ 45,000 Discount on Notes Payable. (600) Accounts Payable........ 105,520 Current Portion of Long- Term Debt Payable Interest Payable.... Salary Payable... Employee Payroll Taxes Payable........ Employer Payroll Taxes Payable. Employee Benefits Payable... Estimated Vacation Pay Liability. 7,620 Sales Tax Payable........ 738 Customer Deposits Payable.. 6,950 Unearned Rent Revenue... 6,000 Long-Term Debt Payable... 120,000 Contingent Liabilities..