A review of the ledger of terrell company at december 31, Ask an Expert

Accounting

A review of the ledger of Terrell Company at December 31, 2012,produces these data pertaining to the preparation of annual adjusting entries.

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.

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.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9958524

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