A partial trial balance of Opticar Corp. is as follows on December 31, 2014.

Dr. Cr.

Supplies expense $ 35,000

Accrued salaries and wages $ 7,500

Interest receivable on investments 650

Insurance expense 156,000

Prepaid rent 36,000

Accrued interest payable 65,000

Additional adjusting data:

1. A physical count of supplies on hand on December 31, 2014, totaled $6,500.

2. Through oversight, the sales salaries of $4,000 were not accrued as of December 31, 2014.

3. The Interest Receivable on Investments account was left unchanged during 2014. Accrued interest

on investments amounts to $2,800 on December 31, 2014.

4. The unexpired portions of the insurance policies totaled $42,000 as of December 31, 2014.

5. $36,000 was paid on January 1, 2014 for the rent of a building through the end of 2015.

6. Depreciation for the year was erroneously recorded as $75,000 rather than the correct figure of $7,000.

7. A further review of depreciation calculations of prior years revealed that depreciation was overstated

by $45,000. It was decided that this oversight should be corrected by a prior period adjustment.

Instructions

(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December

31, 2014? (Ignore income tax considerations.)

(b) Assuming that the books have been closed, what are the adjusting entries necessary at December

31, 2014? (Ignore income tax considerations.)

(c) Repeat the requirements for transactions 6 and 7, taking into account income tax effects (use a 40%

tax rate) and assuming: (1) books have not been closed, and (2) books have been closed.