Selected account balances from December 31, 2015, accounts balance of the Gracy Company are listed below:

Balances:
Inventory, January 1, 2015	$12,500
Purchases	25,000
Salaries Expense	5,000
Rent Expense	3,250
General and Admin Exp	2,500
Sales	$61,000
Dividends Declared	3,500

In addition, the following information is available:

The cost of the ending inventory on December 31, 2015, is $7,500.

$890 of salaries have accrued as of December 31.

On March 30, Gracy purchased a 12-month insurance policy for $240. The purchase was debited to Prepaid Insurance.

On December 1, the company paid 2 months' rent in advance. The $1500 payment was debited to Rent Expense.

In December, a customer paid $1,000 in advance for merchandise that will be shipped by Gracy in 2016. The amount received was credited to Sales.

Gracy estimates its bad debts to be 1% of sales (after all adjustments).

The income tax rate is 30%.

Gracy Company uses a periodic inventory system.

Required:

Using a general journal format, prepare the required adjusting entries.