2. The following trial balance was prepared by OZ Company as of December 31, 2005. The adjusting entries for 2004 have made, except for any specifically noted below. Cash Account Receivable 15,000 Inventories 15,000 Equipment 17,000 Land 22,400 Building 6,400 Deferred charges 7.600 Accounts Payable 1, 100 Note Payable 5.500 Capital stock (par $10) 8,000 Earned surplus 38,500 32.500 84,500 84,500 You find that certain errors and omissions are reflected in the above trial balance, including the following: a. The $15,000 balance in the accounts receivable represents the entire amount owed to the company, of this amount, $12,400 is from trade customers, and 5% of that amount is estimated to be uncollectible. The remaining amount owed to the company represents a long-term advance to its president. b. Inventories include $1,000 of goods incorrectly valued at double their cost (i.e. Reported at $2,000). No correction has been recorded. Office supplies on hand of $500 also are included in the balance of inventories. as C. When the equipment and building were purchased new on January 1, 1993, they had estimated lives of 10 and 25 years respectively. They have been depreciated using the straight-line method on assumption of zero residual value, and depreciation has been credited directly to the asset accounts. Depreciation has been recorded for 2005. d. The balance in the land includes $1,000 payment made as a deposit of earnest money on the purchase of an adjoining tract. The option to buy it has not yet been exercised and probably will not be exercised during the coming year. e. The interest-bearing note dated April 1, 2005, matures March 31, 2006. Interest has not been recorded V f. There are 2,500 common stock shares still outstanding. Page 15 of