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Requirements: a. Copy the trial balance above in the first two columns of a 10-column work sheet. b. Prepare adjusting journal entries in journal form

Requirements:

a. Copy the trial balance above in the first two columns of a 10-column work sheet.

b. Prepare adjusting journal entries in journal form from the following information (the fiscal year ends December 31).

1. Estimated bad debts, .5% of sales less returns and allowances.

2. Depreciation on building 4% per year; on furniture and fixtures, 10% per year.

3. Insurance expired during the year, $3,900.

4. Interest at 12% is payable on the mortgage on January 1 of each year

5. Sales salaries accrued, December 31, $4,000.

6. Advertising expense paid in advance, $740.

7. Office supplies on hand December 31, $1,600 (charged to Miscellaneous Office Expenses when purchased).

8. Interest accrued on notes payable, December 31, $1,500.

c. Transfer the adjusting entries to the work sheet and complete it.

d. Prepare an income statement, a balance sheet, and a statement of retained earnings.

e. Prepare closing journal entries.

f. Indicate the adjusting entries that would be reversed.

Debit Credit
Cash 13,600
Accounts Receivable 64,800
Allowance for Doubtful Accounts 2,000
Inventory 76,000
Office Supplies
Land 40,000
Building 90,000
Accumulated Depreciation of Building 14,400
Furniture and Fixtures 22,000
Accumulated Depreciation of Furniture and Fixtures 6,600
Prepaid Insurance 7,800
Prepaid Advertising
Accounts Payable 34,200
Salaries Payable
Interest Payable
Notes Payable 30,000
Mortgage Payable 40,000
Common Stock 60,000
Retained Earnings 64,730
Sales 720,000
Sales Returns and Allowances 2,800
Sales Discounts 5,900
Cost of Goods Sold 533,700
Sales Salaries Expense 54,000
Advertising Expense 9,400
Salaries Expense, Office and General 31,000
Heat, Light, and Water Expense 15,100
Telephone Expense 1,700
Miscellaneous Office Expenses 2,000
Bad Debt Expense
Depreciation Expense
Insurance Expense
Interest Expense 2,130
Subtotal
Net Income
Totals 971,930 971,930

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