Sunland Company's balance sheet at December 31, 2019, is presented below. Cash Inventory Prepaid insurance Equipment Sunland Company Balance Sheet December 31, 2019 $30,000 Accounts payable 30,000 Interest payable 7,440 Bonds payable 39,540 Common stock Retained earnings $106,980 $13,850 2,625 52,500 19,905 18,100 $106,980 During 2020, the following transactions occurred. 1. Sunland paid $2,625 interest on the bonds on January 1, 2020. 2. Sunland purchased $243,100 of inventory on account. 3. Sunland sold for $492,500 cash inventory which cost $264,500. Sunland also collected $34,475 sales taxes. Sunland paid $234,000 on accounts payable. Sunland paid $2,625 interest on the bonds on July 1, 2020. 6. The prepaid insurance ($7,440) expired on July 31. 7. On August 1, Sunland paid $12,000 for insurance coverage from August 1, 2020, through July 31, 2021. 8. Sunland paid $23,500 sales taxes to the state. 9. Paid other operating expenses, $91,800. 10. Retired the bonds on December 31, 2020, by paying $49,500 plus $2,625 interest. 11. Issued $90,500 of 8% bonds on December 31, 2020, at 104. The bonds pay interest every December 31. Adjustment data: 1. Recorded the insurance expired from item 7. 2. The equipment was acquired on December 31, 2019, and will be depreciated on a straight-line basis over 5 years with a $2,700 salvage value. 3. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) Prepare journal entries for the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 1. (To record sales revenue.) (To record cost of goods sold.) 10. (To record payment of bond interest) (To record redemption of bonds) 11. Prepare journal entries for the adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit