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A review of the ledger of Terrell Company at December 31, 2012, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid
A review of the ledger of Terrell Company at December 31, 2012, produces these data pertaining to the preparation of annual adjusting entries.
1. | Prepaid Insurance $16,000: The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2011, for $14,340. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2012, for $7,490. This policy has a term of 2 years. |
2. | Unearned Subscription Revenue $29,350: The company began selling magazine subscriptions on October 1, 2012 on an annual basis. The selling price of a subscription is $30. A review of subscription contracts reveals the following. |
Subscription | Number of | |
Start Date | Subscriptions | |
October 1 | 390 | |
November 1 | 342 | |
December 1 | 400 | |
1,132 |
3. | Notes Payable, $40,800: This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1. |
4. | Salaries Payable $0: There are 10 salaried employees. Salaries are paid every Friday for the current week. 5 employees receive a salary of $620 each per week, and 5 employees earn $730 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. |
Prepare the adjusting entries at December 31, 2012.
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