Prepare Journal Entries

Sheridan Company's balance sheet at December 31, 2021, is presented below. During January 2022 , the following transactions occurred. Sheridan uses the perpetual inventory method. 3 Sheridan wrote off as uncollectible the accounts of Walter Corporation ( $500 ) and Drake Company (\$300). 8 Sheridan purchased $15,580 of inventory on account. 11 Sheridan sold for $26,200 on account inventory that cost $18,800. 15 Sheridan sold inventory that cost $700 to Jack Rice for \$900. Rice charged this amount on his Visa First Bank card. The service fee charged Sheridan by First Bank is 3%. 17 Sheridan collected $20,800 from customers on account. 21 Sheridan paid $15,640 on accounts payable. 24 Sheridan received payment in full (\$300) from Drake Company on the account written off on January 3. 27 Sheridan purchased advertising supplies for $1,270 cash. 31 Sheridan paid other operating expenses, $2,980. Adjustment data: 1. Interest is recorded for the month on the note from January 1. 2. Bad debts are expected to be 6% of the January 31,2022 , accounts receivable. 3. A count of advertising supplies on January 31,2022 , reveals that $520 remains unused. 4. The income tax rate is 30%. (Hint: Prepare the income statement up to Income before taxes and multiply by 30% to compute the amount; round to whole dollars.) (You may want to set up T-accounts to determine ending balances.)