A review of the ledger of Felipe Company at December 31 2012 produces the foll

    A review of the ledger of Felipe Company at December 31 2012 produces the following data pertaining to the preparation of annual adjusting entries.

    1. Salaries and Wages Payable $0: There are eight salaried employees. Salaries are paid every Friday for the current week. Six employees receive a salary
    of $800 each per week and two employees earn $600 each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the
    last 2 days of December.

    2. Unearned Rent Revenue $300000: The company began subleasing office space in its new building on November 1. Each tenant is required to make a $5000
    security dep osit that is not refundable until occupancy is terminated. At December 31 the company had the following rental contracts that are paid in full
    for the entire term of the lease.

    Term

    Monthly

    Number

    Date

    (in months)

    Rent

    of Leases

    Nov. 1

    6

    $4000

    5

    Dec. 1

    6

    7500

    4

    3. Prepaid Advertising $13200: This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade
    magazines. The terms of the contracts are as follows.

    Number of

    Magazine

    Contract

    Date

    Amount

    Issues

    A650

    May 1

    $6000

    12

    B974

    Sept. 1

    7200

    18

    The first advertisement runs in the month in which the contract is signed.

    4. Notes Payable $80000: This balance consists of a note for 1 year at an annual interest rate of 8% dated April 1 2012.

    Instructions

    Prepare the adjusting entries at December 31 2012. Show all computations.

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