Problem 1. Adjusting entries

The following trial balance was taken from the books of Best Corporation on December 31, 2020.

Account	Debit	Credit
Cash	$ 12,000
Accounts Receivable	40,000
Note Receivable	7,000
Allowance for Doubtful Accounts		$ 1,800
Merchandise Inventory	54,000
Unexpired Insurance	4,800
Furniture and Equipment	125,000
Accumulated Depreciation of F. & E.		15,000
Accounts Payable		10,800
Common Stock		44,000
Retained Earnings		55,000
Sales		310,000
Cost of Goods Sold	131,000
Salaries Expense	50,000
Rent Expense	12,800	_________
Totals	$436,600	$436,600

At year end, the following items have not yet been recorded.

1. Insurance expired during the year, $2,500.

2. Estimated bad debts, 2% of gross sales.

3. Depreciation on furniture and equipment, 12% per year.

4. Interest at 8% is receivable on the note for one full year.

5. Rent paid in advance at December 31, $4,500 (originally charged to expense).

6. Accrued salaries at December 31, $6,500.

Instructions:

Prepare the necessary adjusting entries.

Problem 2. Balance Sheet and Income Statement Classifications.

Specify, to the left of each account, the letter of the financial statement classification the account would appear in. Use only the classifications shown.

Balance Sheet	Income and Retained Earnings Statement
a. Current Assets	g. Sales
b. Property, Plant, and Equipment	h. Revenue
c. Current Liabilities	i. Operating Expenses
d. Long-term Debt	j. Retained Earnings Section
Capital Stock Retained Earnings	k. Not on the Statements
_____ 1. Common Stock	_____ 11. Salaries and Wages Expense
_____ 2. Buildings	_____ 12. Cash
_____ 3. Inventory	_____ 13. Interest Revenue
_____ 4. Office Expense	_____ 14. Accounts Payable
_____ 5. Allowance for Doubtful Accounts	_____ 15. Accounts Receivable
_____ 6. Notes PayableShort Term	_____ 16. Interest Expense
_____ 7. Accum. DepreciationBuildings	_____ 17. Dividends Declared and Paid
_____ 8. Mortgage Payable due 2023	_____ 18. Insurance Expense
_____ 9. Sales	_____ 19. Taxes Payable
_____ 10. Retained Earnings January1, 2020	_____ 20. Retained Earnings Dec. 31, 2020