A review of the ledger of Khan Company at 31 December 2012 produces the following data pertaining to

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

1. Prepaid Insurance $9 800. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on 1 July 2011, for $6 000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on 1 January 2012 for $4 800. This policy has a term of 2 years.

2. Unearned Subscriptions $49 000. The company began selling magazine subscriptions in 2012 on an annual basis. The magazine is published monthly. The selling price of a subscription is $50. A review of subscription contracts reveals the following

Subscription Date: Number of Subscription:

1 October 200 1 November 300 1 December 480 980 3. Notes Payable $40 000. This balance consists of a note for 6 months at an annual interest rate of 9%, dated 1 September. 4. Salaries Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $500 each per week, and three employees earn $800 each per week. 31 December is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.

Instruction: Prepare the adjusting entries as at 31 December 2012.

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