The following list of accounts and their balances represents the unadjusted trial balance of FASSV

Company at December 31, 2013:

Cash $ 32,690

Short-term Investment 70,000

Accounts Receivable 69,000

Allowance for Doubtful Accounts $ 500

Merchandise Inventory 54,720

Prepaid Rent 30,000

Plant and Equipment 156,000

Accumulated Depreciation 14,740

Accounts Payable 11,370

Bonds Payable 90,000

Common Stock 170,000

Retained Earnings 97,180

Sales 218,400

Cost of Goods Sold 154,400

Transportation-Out 11,000

Salaries and Wages Expense 32,000

Interest Expense 2,040

Rent Revenue 18,000

Miscellaneous Expense 890

Insurance Expense 7,450

$620,190 $620,190

Additional Data:

1. The balance in the Insurance Expense account contains the premium costs of three policies:

Policy 1, remaining cost of $2,550, 1-yr. term, taken out on May 1, 2012;

Policy 2, original cost of $3,600, 3-yr. term, taken out on Oct. 1, 2013;

Policy 3, original cost of $1,300, 1-yr. term, taken out on Jan. 1, 2013.

2. On September 30, 2013, Alt received $18,000 rent from its lessee for an eighteen month lease

beginning on that date.

3. The regular rate of depreciation is 10% per year. Acquisitions and retirements during a year are

depreciated at half this rate. There were no purchases during the year. On December 31, 2012, the

balance of the Plant and Equipment account was $260,000.

4. On December 28, 2013, the bookkeeper incorrectly credited sales for a receipt on account in the

amount of $10,000.

5. At December 31, 2013, salaries accrued but unpaid were $4,200.

6. Alt estimates that 2% of sales will become uncollectible.

7. On August 1, 2013, Alt purchased, as a short-term investment, 70 $1,000, 9% bonds of Allen Corp.

at par. The bonds mature on August 1, 2014. Interest payment dates are July 31 and January 31.

8. On April 30, 2013, Alt rented a warehouse for $2,500 per month, paying $30,000 in advance.

Instructions

(a) Record the necessary correcting and adjusting entries and EXPLAIN/CALCULATION

(b) Indicate which of the adjusting entries may be reversed at the beginning of the next

accounting period and EXPLAIN/CALCULATION