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.

Smith Manufacturing, Inc. Trial Balance December 31, 20XX Cash Accounts receivable Allowance for uncollectible accounts Prepaid insurance Inventory Land Building Accumulated depreciation-building Equipment Accumulated depreciation-equipment Accounts payable Note payable (due in 10 months, 5%) Salaries payable Interest payable Note payable (due in 5 years, 3%) Common Stock (3,000 shares outstanding) Retained earnings Sales revenue Cost of goods sold Salaries expense Insurance expense Depreciation expense Interest expense Bad debt expense Totals DR 362,750 320,750 CR 15,000 10,000 30,000 50,000 150,000 7,500 500,000 50,000 105,000 125,000 500,000 300,000 171,000 850,000 550,000 150,000 2,123,500 2,123,500 Smith Manufacturing, Inc. Post-Closing Trial Balance December 31, 20XX DR Cash Accounts receivable Allowance for uncollectible accounts Prepaid insurance Inventory Land Building Accumulated depreciation-building Equipment Accumulated depreciation-equipment Accounts payable Note payable Salaries payable Interest payable Note payable (due in 5 years, 3%) Common Stock (3,000 shares outstanding) Retained earnings Sales revenue Cost of goods sold Salaries expense Insurance expense Depreciation expense Interest expense Bad debt expense Totals CR 15,000 225,750 20,000 5,000 80,000 50,000 150,000 7,500 500,000 50,000 55,000 50,000 5,000 17,250 350,000 300,000 171,000 1,025,750 1,025,750