Problem 1: The trial balance of Statewide Corporation is reproduced below. The following information below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts.

Instructions

As the accountant for Statewide Corporation, you are to prepare adjusting entries based on the following data, entering the adjustments on the work sheet and completing the additional columns with respect to the income statement and balance sheet. Carefully key your adjustments and label all items. (Due to time constraints, an adjusted trial balance is not required.) Round all computations to the nearest dollar.

(a)Winsor determined that one percent of sales will become uncollectible.

(b)Depreciation is computed using the straight-line method, with a ten-year life and $5,000 salvage value.

(c)Salesmen are paid commissions of 15% of sales.Commissions on sales for December have not been paid.

(d)The note was issued on October 1, bearing interest at 8%, due Feb. 1, 2021.

(e)A physical inventory of supplies indicated $440 of supplies currently in stock.

(f)Provisions of a lease contract specify payments must be made one month in advance, with monthly payments at $800/mo. This provision has been complied with as of Dec. 31, 2020.

Statewide Corporation

Work Sheet

For the Year Ended December 31, 2020

Trial Balance AdjustmentsIncome StatementBalance Sheet

Accounts Dr. Cr. Dr. Cr. Dr. Cr.Dr. Cr.

Cash 12,400

Equity Invest. 14,050

Accounts Rec. 30,000

Allow. for D. A.420

Inventory 16,800

Supplies 1,040

Equipment 65,000

Accum. Depr.-Equip. 9,500

Accounts Payable 4,400

Notes Payable 10,000

Common Stock 40,000

Ret. Earnings 29,690

Sales Revenue 360,000

Cost of Goods Sold 245,520

Salaries and Wages Exp. 20,800

Sales Comm. Exp. 39,000

Rent Expense 7,200

Misc. Expense 2,200

Totals454,010454,010