Dr.	Cr.
Cash				$25,600
Accounts receivable, 12/31/16				116,200
Inventory, 12/31/16				62,000
Investments, at cost				17,980
Furniture and Fixtures				198,200
Accumulated depreciation, 12/31/16					$82,400
Accounts payable, 12/31/16					17,000
Capital stock, $10 par value					50,000
Retained earnings, 12/31/2016					119,600
Sales					805,980
Notes payable, due 3/31/19					100,000
Purchases				405,100
Land improvement expense				50,000
Salaries expense				174,000
Payroll Taxes				12,400
Income tax expense				45,000
Insurance expense				8,700
Rent expense				34,200
Utilities expense				12,600
Travel and entertainment expense				13,000
TOTALS				$1,174,980	$1,174,980

Bledsoe has developed plans to expand into the wholesale flower market and is in the process of negotiating a bank loan to finance the expansion. The bank is requesting 2017 financial statements prepared on the accrual basis of accounting from Bledsoe. During the course of a review engagement of Bledsoe, your firm, obtained the following information:

1.Amounts due from customers totaled $142,000 at 12/31/2017. During the year the company wrote off $7,400 of receivables that were deemed to be uncollectible. An analysis of the receivables revealed that an estimated 3% of the balance will probably not be collected in 2018. There were no uncollectable receivables estimated at 12/31/2016.

2.Unpaid invoices for flower purchases totaled $20,500 at December 31, 2017.

3. The inventory totaled $76,800 based on a physical count of the goods at December 31, 2017. The inventory was priced at cost, which approximates market value.

4. On May 1, 2017, Bledsoe paid $8,700 to renew its comprehensive insurance coverage for one year. The premium on the previous one-year policy, which expired on April 30, 2017, was $7,800. No adjustment was made in the prior year, Bledsoe had never heard of a prepaid.

5. On January 2, 2017, Bledsoe entered into a 25 year operating lease for the vacant lot adjacent to Bledsoe's North retail store for use as a parking lot. As agreed in the lease, Bledsoe paved and fenced in the lot at a cost of $50,000. The improvements were completed on July 2, 2017, and have an estimated useful life of 10 years. Depreciation on furniture and fixtures was $15,000 for 2017.

6. Bledsoe is being sued for $100,000. The coverage under the comprehensive insurance policy is limited to $50,000. Bledsoe's attorney believes that an unfavorable outcome is probable and that a reasonable settlement is $65,000.

7. All employees are paid weekly on Friday. The average payroll is $3,000 (6 day work week) per week. Employees were last paid on Friday, December 29th, 2017 for the week ended December 22nd.

8. Bledsoe's has made estimated tax payments of $15,000 per quarter for the first three quarters of 2017. Bledsoe's estimated tax rate is 35%.

9.Bledsoe's took out a 2 year note payable on April 1, 2017. The note bears interest at 4%. Principal and interest are due at maturity.

10.The company had two locations and due to poor performance, they decided to discontinue operations related to the south location. The revenue for this location (which is included in the above trial balance) amounted to $83,000 and the expenses, $91,000 (purchases $50,000, salaries $26,000 and rent $15,000). The company disposed of all assets of the south location for a loss of $10,000 ($31,000 original cost with accumulated depreciation of $17,000).

11. The investments account is comprised of two investments. One $100,000 bond was purchased at face value and Bledsoes intends to hold until it matures. The interest on these bonds are 3% and is paid annually on January 31. Bledsoe purchased these bonds on September 1^st of the current year. The fair value of these bonds are $96,000. The other investment are shares of Google stock, which were purchased on 10/20/16 for $797/share. Assume the closing price of Google on 12/31/16, was $814/share.

Prepare the adjusting Journal entries