Preparing Financial Statements and Closing Entries

Hayley Inc. prepared the following adjusted trial balance as of December 31, 2020.

Adjusted Trial Balance

Account debit Credit

cash 18,000

account receivable 19,200

inventory 24,000

prepaid insurance 720

Equipment 135,000

Accumulated Depreciation - Equipment 27,000

accounts payable 21,000

salaries payable 2,400

interest payable 240

note payable 30,000

common stock 66,000

retained earnings 48,000

dividends 1,800

sales 210,000

cost of goods sold 120,000

salaries expense 71,520

repair expense 1,260

insurance expense 900

selling expense 1,320

Depreciation expense 7,920

interest expense 3,000

totals $404,640 $404,640

b. Prepare closing entries as of December 31, 2020.