Prepare adjusting entries.

A review of the ledger of Monkey Ltd at 30 June 2019 produced the following data relating to the preparation of annual adjusting entries:

1. Prepaid insurance $37260: the entity has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on 1 January 2018 for $33300. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on 1 July 2018 for $9510. This policy has a term of 2 years.

2. Subscriptionrevenue received inadvance $135200:theentitybegan sellingmagazine subscriptions on 1 April 2019 on an annual basis. The selling price of a subscription is $130. A review of subscription contracts reveals the following: Subscription start date Number of subscriptions

1 April 200

1 May 300

1 June 540

1040 The annual subscription is for 12 monthly issues. The June magazine for all of the subscriptions had been delivered to the subscribers at 30 June 2019.

3. Bank loan $100000: the loan was taken out on 1 April at an annual interest rate of 6%.

4. Salaries payable: There are eight salaried employees. Salaries are paid every Friday for the current week. Four employees receive a salary of $1050 each per week, and three employees earn $1350 each per week. 30 June is a Tuesday. Employees do not work on weekends. All employees worked the last 2 days of June.

Required

(a) Prepare the adjusting journal entries at 30 June 2019.

(b) Explain why the business would not recognise the full subscription revenue when the customers sign up for the magazines and pay for the subscription.