A review of the ledger of Chance Corporation at July 31, 2015, produces the following unadjusted data for the preparation of annual adjusting entries:

1. Prepaid Insurance, July 31 unadjusted balance, $11,700: The company has separate insurance policies on its building and its vehicles. Policy B4564 on the building was purchased on December 1, 2013, for $10,800. The policy has a term of two years. Policy A2958 on the vehicles was purchased on February 1, 2015, for $4,500. This policy has a term of 18 months.

2. Buildings, July 31 unadjusted balance, $444,000: The company owns two buildings. The first was purchased on September 1, 2001, for $252,000 and has an estimated 30-year useful life. The second was purchased on May 1, 2009, for $192,000 and has an estimated 40-year useful life.

3. Unearned Revenue, July 31 unadjusted balance, $51,000: The selling price of a magazine subscription is $50 for 12 monthly issues. A review of subscription contracts reveals the following:

Subscription Date Number of Subscriptions Sold

November 1, 2014................................................220

February 1, 2015..................................................310

May 1, 2015.......................................................490

                                                                            1,020

4. Salaries Payable, July 31 unadjusted balance, $0: There are nine salaried employees. Salaries are paid every Monday for the previous six-day workweek (Monday to Saturday). Six employees receive a salary of $625 each per week, and three employees earn $750 each per week. July 31 is a Friday.

Instructions

(a) Prepare a calculation to show why the unadjusted balance in the Prepaid Insurance account is $11,700 and why the unadjusted balance in the Unearned Revenue account is $51,000.

(b) Prepare the adjusting journal entries required at July 31.