Accounts Payable .................................................................................. $ 23,000 Accounts Receivable ............................................................................. 38,000 Accumulated Depreciation--Equipment ................................................. 64,000 Allowance for Doubtful Accounts ........................................................... 2,000 Patent .................................................................................................... 8,400 Capital Stock, $10 par ........................................................................... 100,000 Cash ...................................................................................................... 60,260 Inventory ................................................................................................ 105,000 Sales Supplies Inventory ....................................................................... 900 Interest Expense .................................................................................... 6,600 Inventory, December 31, 2017 .............................................................. 104,850 Contributed Capital in Excess of Par Value ........................................... 15,000 Long-Term Note Receivable, 14% ......................................................... 12,000 Mortgage Payable, 12% ......................................................................... 60,000 Investment Revenue ......... .................................................................... 1,120 Accumulated Depreciation-Equipment ................................................... 64,000 Rent Revenue ........................................................................................ 3,000 Retained Earnings, December 31, 2017 ................................................ 32,440 Sales ...................................................................................................... 700,000 Cost of Goods Sold ................................................................................ 380,000 Selling Expenses ................................................................................... 164,400 General and Administrative Expenses .................................................. 55,000 Equipment ............................................................................................. 180,000 Adjustments required on December 31, 2018: (a) Estimated bad debt loss rate is 1/4 percent of credit sales. Credit sales for the year amounted to $200,000. (b) Interest on the long-term note receivable was last collected August 31, 2018. (c) Estimated life of the equipment is 10 years, with a residual value of $20,000. Allocate 10 percent of depreciation expense to general and administrative expense and the remainder to selling expenses. Use straight-line depreciation. (d) Estimated economic life of the patent is 14 years (from January 1, 2018) with no residual value. Straight-line amortization is used. Depreciation expense is classified as selling expense. (e) Interest on the mortgage payable was last paid on November 30, 2018. (f) On June 1, 2018, the company rented some office space to a tenant for one year and collected $3,000 rent in advance for the year; the entire amount was credited to rent revenue on this date. (g) On December 31, 2018, the company received a statement for calendar year 2018 property taxes amounting to $1,300. The payment is due February 15, 2019. Assume that the payment will be made on February 15, 2019. (h) Sales supplies on hand at December 31, 2018, amounted to $300. (i) Assume an average income tax rate of 40 percent corporate tax rate on all items. 5-1. Prepare adjusting journal entries. 5-2. How much should be reported as selling expenses? 5-3. What is the ending balance in retained earnings?