The ML Corporations post-closing trial balance at December 31, 20x5 was as follows:

Dr. Cr.

Cash--------------------------------------------------------------------------------$36,000 Accounts receivable------------------------------------------------------------176,000 Allowance for doubtful accounts -----------------------------------------------------------------------$23,000

Inventory-------------------------------------------------------------------------- 320,000 Prepaid insurance------------------------------------------------------------------1,400 Land----------------------------------------------------------------------------------40,000 Building----------------------------------------------------------------------------300,000 Accumulated depreciation building-------------------------------------------------------------------120,000

Equipment ------------------------------------------------------------------------145,000 Accumulated depreciation equipment--------------------------------------------------------------- 38,000

Patents ------------------------------------------------------------------------------34,000 Accounts payable ------------------------------------------------------------------------------------------127,000 Salaries payable----------------------------------------------------------------------------------------------- 5,600 Income taxes payable ---------------------------------------------------------------------------------------12,000 Warranty liability ----------------------------------------------------------------------------------------------13,000 Bonds payable----------------------------------------------------------------------------------------------- 400,000 Common stock -----------------------------------------------------------------------------------------------150,000 Retained Earnings -------------------------------------------------------------------------------------------124,600

TOTAL Dr.=$1,052,400

TOTAL Cr.=$1,052,400

Additional information

The company uses a FIFO perpetual inventory system.

The prepaid insurance is for a one year policy taken out in 20x5 that expires on March 1, 20x6.

The building is being depreciated on a straight-line basis over 40 years.

The equipment is being depreciated using the diminishing method at a rate of 20%.

The patent remaining useful life at December 31, 20x5 is 8 years.

There are 10,000 shares of common stock outstanding.

The following transactions took place during the year:

1. Total sales on account were $1,600,000.

2. Cash collections on accounts receivable totaled $1,520,000.

3. Accounts written off totaled $34,000.

4. Recoveries of previously written off accounts receivable totaled $5,000.

5. Inventory purchased on account totaled $960,000.

6. Inventory costing $16,000 was returned to suppliers.

7. On March15, an additional 3,000 common shares were issued for $75,000.

Cash disbursements were as follows:

8. Payments on accounts payable $945,000

9. Payments for salaries $320,000

10. Interest payments on bonds payable $26,000

11. Purchase of equipment on January $2 30,000

12. Payments to the Canada Revenue Agency for income taxes $12,000

13. Repurchase of 1,000 common shares on Aug 23 $22,000

14. Insurance policy taken out on March 1 one year policy. $24,000

15. Operating expenses paid $130,000

The following adjustments need to be made at year-end:

16. The ending balance of the allowance for doubtful accounts is estimated to be $17,930.

17. An adjustment is made for insurance expense.

18. Depreciation expense on the building, equipment and patents.

19. Salaries payable at December 31, 20x6 amount to $6,700.

20. Dividends of $80,000 were declared and paid on December 15, 20x6.

Required

Prepare journal entries for the above transactions.