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Required: 1. Record adjusting entries for the following information. a. The records show that the equipment was estimated to have a total estimated useful life of 10 years with a residual value at the end of its life of $13,590. b. The balance in the Prepaid Insurance account was reviewed and it was determined that $350 was unused on December 31, 2020. c. A review of the store supplies on December 31,2020 , revealed a balance on hand of $1,730; a similar examination of the office supplies showed that $735 had been used. d. Accrued salaries payable, $1,350. e. A count of the merchandise inventory revealed a balance on hand December 31,2020, of $32,990. Explanation: 1. Depreciation expense: $64,590$13,590/10 years =$5,100 depreciation per year. Prepaid insurance expired: $5,155$350=$4,805. Shrinkage determined by physical count of inventory: $33,700$32,990=$710. 2. Net sales =$524,500$4,170=$520,330. \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Use the unadjusted trial balance of Electric Bike on December 31, 2020.} \\ \hline & Debit & Credit \\ \hline Cash & 7,200 & \\ \hline Accounts receivable & 21,765 & \\ \hline Merchandise inventory & 33,700 & \\ \hline Store supplies & 1,965 & \\ \hline Office supplies & 965 & \\ \hline Prepaid insurance & 5,155 & \\ \hline Equipment & 64,590 & \\ \hline Accumulated depreciation, equipment & & 12,755 \\ \hline Accounts payable & & 7,100 \\ \hline Salaries payable & & 0 \\ \hline Braeden Li, capital & & 156,295 \\ \hline Braeden Li, withdrawals & 57,500 & \\ \hline Interest income & & 220 \\ \hline Sales & & 524,500 \\ \hline Sales returns and allowances & 4,170 & \\ \hline Cost of goods sold & 380.260 & \\ \hline Salaries expense & 95,400 & \\ \hline Rent expense & 28.200 & \\ \hline Supplies expense & 0 & \\ \hline Depreciation expense, equipment & 0 & \\ \hline Insurance expense & 0 & \\ \hline Totals & 700.870 & 700,870 \\ \hline \end{tabular} 1 Record ad justing entries bor the following information. Depreciation expense Accumulated Depreciation, Equpmert Insurance expense Prepaid insurance Supplies expense Store supplies Supplies expense Ofice supples Salaries expense Salaries payable Cost of goods sold Merchandse inventory 2. Prepare a multiple-step income statement showng the expensesia detail ELECTRIC BIKE Incorne Statement For Year Ended December 31. 2020 Sales Less: Sales retums and allowances Net sales Cost of goods sold Gross profit Operating expenses Salaries expense Rent expense Suppies expense Depreciation expense, equipment insurance expense Total operaing expenses income from operations Other revenues and expenses hierest income Profit