Account Balances as of December 31^st

		Debit Balance		Credit Balance
100000	Bank Account	$252,518
110100	Accounts Receivable (Direct Posting Account)	108,420
110150	Allowance for Bad Debts			2,500
110200	Interest Receivable
200600	Inventory-Operating Supplies	750
200900	Inventory-Raw Materials (Direct Post)	32,000
200910	Inventory-Finished Goods (Direct Post)	281,298
200920	Inventory-Trading Goods (Direct Post)	66,474
200930	Inventory-Semi-finished Goods (Direct Post)
210000	Prepaid Insurance	5,000
211000	Prepaid Supplies
212000	Prepaid Advertising	1,000
215000	Prepaid Rent
216000	Deposits
220000	Notes Receivable
220110	Land (Direct Post)	425,000
220210	Production Machinery, Equip & Fixtures(Dir.Post)	915,000
220310	Accumulated Depreciation-Machinery (Direct Post)			305,000
220400	Office Furniture
220500	Accumulated Depreciation-Office Furniture
220600	Office Equip and Computers
220700	Accumulated Depreciation- Office Equipment
300100	Payables-Income Taxes
300200	Accounts Payable (Direct Posting Account)			47,900
300300	Payables-Interest
300400	Payables-Short-Term Notes
300500	Payables-Long-Term Notes
300600	Payables-Commissions
300700	Payables-Salaries and Wages			110,000
300800	Accrued Expense			988
310000	Goods Receipt / Invoice Receipt Account
320000	Accrued Tax Output			3,063
321000	Accrued Tax- Input
322000	Unearned Revenues
329000	Common Stock			1,000,000
329100	Additional Paid-in-Capital
330010	Retained Earnings (Direct Posting)			618,009
1.Based on prior experience, GBI estimates that approximately % of the net credit sales (gross credit sales minus returns of credit sales) for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts as an adjusting entry each month. 2.As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the trading goods inventory was taken at the end of January. It was determined that the value of the trading goods merchandise on hand was $20,710. 3.GBI counted the office supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $620. 4.Production Machinery, Equipment and Fixtures were placed in service on January 1, 2008, are expected to last 20 years with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence). 5.GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $1,046. 6.Liability insurance for the six month period ending on February 28 in the amount of $15,000 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six month policy period. 7.GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed.) Record Adjusting Entries