Smith Manufacturing, Inc. has asked that you assist with some bookkeeping services. The company is nearing year-end and needs help to prepare adjusting and closing entries. Following is the information that you need to prepare the entries:

Bad debts are estimated at 1% of Net Sales.

There is an $8,000 balance of unexpired insurance in the Prepaid Insurance account.

A physical inventory determined that there is $40,000 balance in inventory.

Buildings are depreciated on a straight-line basis over 20 years, no salvage value.

Equipment is depreciated on a straight-line basis over ten years, no salvage value.

All interest remained unpaid at year-end.

There was $2,000 in salaries payable at year-end.

TRIAL BALANCE Current Year:

Smith Manufacturing, Inc.

Trial Balance

December 31, 20XX

DR

CR

Cash

362,750

Accounts receivable

320,750

Allowance for uncollectible accounts

15,000

Prepaid insurance

10,000

Inventory

30,000

Land

50,000

Building

150,000

Accumulated depreciation-building

7,500

Equipment

500,000

Accumulated depreciation-equipment

50,000

Accounts payable

105,000

Note payable (due in 10 months, 5%)

125,000

Salaries payable

Interest payable

Note payable (due in 5 years, 3%)

500,000

Common Stock (3,000 shares outstanding)

300,000

Retained earnings

171,000

Sales revenue

850,000

Cost of goods sold

550,000

Salaries expense

150,000

Insurance expense

Depreciation expense

Interest expense

Bad debt expense

Totals

2,123,500

2,123,500

TRIAL BALANCE - Prior Year

Smith Manufacturing, Inc.
Post-Closing Trial Balance
December 31, 20XX
	DR	CR
Cash	15,000
Accounts receivable	225,750
Allowance for uncollectible accounts		20,000
Prepaid insurance	5,000
Inventory	80,000
Land	50,000
Building	150,000
Accumulated depreciation-building		7,500
Equipment	500,000
Accumulated depreciation-equipment		50,000
Accounts payable		55,000
Note payable		50,000
Salaries payable		5,000
Interest payable		17,250
Note payable (due in 5 years, 3%)		350,000
Common Stock (3,000 shares outstanding)		300,000
Retained earnings		171,000
Sales revenue
Cost of goods sold
Salaries expense
Insurance expense
Depreciation expense
Interest expense
Bad debt expense
Totals	1,025,750	1,025,750