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. |