Azul Company had the following balances in its accounting records as of January $1,$ Year $2$:

Assets Liabilities & Stockholders' Equity

Cash $$50,000$ Common Stock $$40,000$

Inventory $-$ Retained Earnings $36,410$

Account Receivable $12,800$

Allow. For Doubtful Acct. $(1,390)$

Vehicle $35,000$

Accum. Depr. $-$ Vehicle $(20,000)$

Total $$76,410$ Total $$76,410$

The following accounting events occurred during Year $2.$

$1$ The vehicle was sold on the first day of the year for $$18,000$ cash.

$2$ Received $$45,000$ cash from issuance of stock.

$3$ Purchased $$1,500$ of supplies on account.

$4$ Paid cash for $$42,200$ of inventory.

$5$ Paid $$18,000$ for $12-$month's of rent on new office building.

$6$ Took out a $$15,000,7\%,9-$month loan from Citywide Bank.

$7$ Paid $$12,000$ to purchase equipment.

$8$ Paid $$800$ in shipping and installation costs for new equipment.

$9$ Sold $65\%$ of the inventory purchased in Event $4$ for $$120,000$ on account.

$10$ Collected $75\%$ of the sales on account in previous event.

$11$ Wrote$-$off receivable in the amount of $$1,300.$

$12$ Incurred $$63,700$ of operating expenses on account.

Year$-$End Adjustments

A Recorded depreciation on the equipment. A full year of depreciation should be taken on the Equipment. The equipment has a salvage of $$1,000$ and a $10-$year life. Use $=$SLN formula to calculate.

B Have $$175$ of office supplies on hand at the end of the period.

C Recognize four months of prepaid rent has expired.

D Physical count of inventory revealed inventory on hand of $$14,000.$

E Accrue four months of interest on the loan.

F Uncollectible Expense is estimated at $2\%$ of sales on account.

G Income Tax Rate is $30\%$ Fill in the description of how each account works. Ask yourself why does the account increase and why does the account decrease?