Question
Selected account balances from the December 31, 2015, trial balance of the Gracy Company are listed below: Debit Credit Inventory, January 1, 2015 $12,500 Purchases
Selected account balances from the December 31, 2015, trial balance of the Gracy Company are listed below:
| Debit | Credit |
Inventory, January 1, 2015 | $12,500 |
|
Purchases | 25,000 |
|
Salaries Expense | 5,000 |
|
Rent Expense | 3,250 |
|
General and Administrative Expenses | 2,500 |
|
Sales |
| $61,000 |
Dividends Distributed | 3,500 |
|
In addition, the following information is available:
The inventory value at 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%. |
Using a general journal format, prepare the required adjusting entries.
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