Reference no: EM13531816

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 $300,000: The company began subleasing office space in its new building on November 1. Each tenant is required to make a $5,000 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	$4,000	5
Dec. 1	6	7,500	4

3. Prepaid Advertising $13,200: 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	$6,000	12
B974	Sept. 1	7,200	18

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

4. Notes Payable $80,000: 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.