Instructions Your examination of Sullivan Company's records provides the following information for the December 31, year-end adjustments: 1. Bad debts are to be recorded at 2% of sales. Sales made on credit totaled $20,000 for the year. 2. Salaries at year-end that have accumulated but have not been paid total $1,400. 3. Annual straight-line depreciation for the company's equipment is based on a cost of $25,000, an estimated life of 8 years, and an estimated residual value of $1,000. 4. Prepaid insurance in the amount of $800 has expired. 5. Interest that has been earned but not collected totals $500. 6. The company has satisfied performance obligations entitling it to rent in the amount of $1,000. 7. Interest on a note payable that has accumulated but has not been paid totals $600. 8. The income tax rate is 30% on current income and is payable in the first quarter of the next year. The pretax income before the preceding adjusting entries is $7,000. Required: Prepare the adjusting entries to record the preceding information.