Presented below is the balance sheet of Harriets Hats as of December 31, 2009, along with some of the transactions that occurred during 2010. Harriet's Hats Ltd. Balance Sheet December 31, 2009 Assets Current Assets: Cash $ 8,000 Accounts Receivable 3,000 Prepaid Rent 500 Inventories 1,000 Total Current Assets $12,500 Property, Plant and Equipment $20,000 Less: Accumulated Dep. (3,500) Property, Plant and Equipment (net) 16,500 Total Assets $29,000 Liabilities and Owner's Equity Current Liabilities: Accounts Payable $ 2,500 Accrued Wages 170 Accrued Interest 90 Notes Payable 2,700 Total Current Liabilities $ 5,460 Common Stock 15,000 Retained Earnings 8,540 Total Shareholders Equity $23,540 Total Liabilities and Shareholders Equity $29,000 Following are some of the transactions that happened during 2010: 1. On September 1, 2010, the company issued a short-term note for $3,000 and on the same date retired the note that was outstanding at the beginning of the period. The old note had a 10 percent interest rate, had been issued on September 1, 2009, and required semi-annual interest payment on February 28 and August 31. The new note carried an 8 percent interest rate with similar payment terms. 2. Rent payments of $1,800 each were made on March 1 and September 1. The payments were for rent on office building and were prepaid for six months. 3. Sales employees were paid $12,000 in salaries during the year. Records indicate that salaries for the last week of December amounted to $250 and would be paid at the end of the first week of January (a two week pay period). Required: 1. Prepare all the journal entries if the firm does not follow the reversing entries convention for recording interest, rent and salaries. 2. Prepare all the journal entries. including the ones on 1/1/2010 and 12/31/2010, if the firm follows the reversing entries convention for recording interest, rent and salaries.