**On July 1, 2013, Avery Services issued a 4% long-term note payable for $10,000. It is payable over a 5-year term in $2,000 principal installments on July 1 of each year. Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period. What happens on December 31, 2013 before statements are prepared?

What is the Answer?: 1)Avery must accrue $200 of interest expense

2)Avery must accrue for the coming $2,000 principal payment

3)Avery must pay out $200 of interest expense to the note holder

4)Avery does not need to take any actions

**On July 1, 2013, Avery Services issued a 4% long-term note payable for $10,000. It is payable over a 5-year term in $2,000 principal installments on July 1 of each year. Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period. Avery pays out $ _ of interest plus $ _ of principal on July 1, 2014

**Publishing Company completed the following transactions during 2016

Oct 1: Sold a six-month subscription (starting on November 1), collecting cash of $300 , plus sales tax of 5 %

Now 15: Remitted (paid) the sales tax to the state of Tennessee.

Dec 31: Made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year.

Journalize necessary transactions and show your calculations.