A review of the ledger of Greenberg at October 31, 2012, produces the following unadjusted data for the preparation of annual adjusting entries:
1. Prepaid Advertising, October 31 unadjusted balance, $14,160: This balance consists of payments on two advertising contracts. The contracts provide for advertising in two trade magazines that publish monthly, and specify that the first advertisement runs in the month following the month in which the contract is signed. In other words, if the contract is signed February 1, the first advertisement will run in the month of March. The terms of the contracts are as follows:
2. Salaries Payable, October 31 unadjusted balance, $0: There are eight salaried employees. Salaries are paid every Friday for a five-day workweek (Monday-Friday). Six employees receive a salary of $750 each per week, and two employees earn $600 each per week. October 31 is a Wednesday.
3. Unearned Revenue, October 31 unadjusted balance, $303,000: The company began subleasing office space in its new building on September 1. At October 31, the company had the following rental contracts that are paid in full for the entire term of the lease:
4. Loan Payable, October 31 unadjusted balance, $90,000: This represents a one-year, 8% note issued on April 1. Interest is payable at maturity.
5. Delivery Truck, October 31 unadjusted balance, $39,000: The Company owns a delivery truck, purchased for $39,000 on April 1, 2011. The truck has a five-year useful life.
Instructions
Prepare the adjusting journal entries at October 31, 2012.
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