Blockbuster's trial balance for the year ended December 31, 2017 is provided below. Blockbuster uses the perpetual inventory system. A count of the inventory on hand shows the actual amount on hand is $26,500. All other year-end adjusting entries have been made.

	Blockbuster
	Trial Balance
	December 31, 2017
Cash		$3,500
Accounts receivable		9,250
Merchandise inventory		26,100
Long-term investment		10,000
Accounts payable		11,100
Interest payable		100
Note payable, due 2020		5,000
A. Smith, Capital		10,270
A. Smith, Drawings		6,000
Sales		195,000
Sales returns and allowances		620
Sales discounts		300
Costs of goods sold		122,500
Salaries expense		26,000
Advertising expense		4,500
Rent expense		12,600
Interest expense		100
		$ 221,470

a) Prepare the adjusting entry to record the correct inventory account

b) Prepare the closing entries

c) Prepare a multiple-step income statement for Blockbuster