The unadjusted trial balance of Imagine Ltd., a private company following ASPE, at December 31, 2020 is as follows:

		Debit		Credit
Cash		$10,850
Accounts receivable		56,500
Allowance for doubtful accounts				$750
FV-NI investments		8,600
Inventory		58,000
Prepaid insurance		2,940
Prepaid rent		13,200
FV-OCI investments		14,000
Bond investment at amortized cost		18,000
Land		10,000
Equipment		104,000
Accumulated depreciationequipment				18,000
Accounts payable				9,310
Bonds payable				50,000
Common shares				100,000
Retained earnings				103,260
Sales revenue				223,310
Rent revenue				10,200
Purchases		170,000
Purchase discounts				2,400
Freight out		9,000
Freight in		3,500
Salaries and wages expense		31,000
Interest expense		6,750
Miscellaneous expense		890
		$517,230		$517,230

Additional information:

1.		On November 1, 2020, Imagine received $10,200 rent from its lessee for a 12-month lease beginning on that date. This was credited to Rent Revenue.
2.		Imagine estimates that 7% of the Accounts Receivable balances on December 31, 2020, will be uncollectible. On December 28, 2020, the bookkeeper incorrectly credited Sales Revenue for a receipt of $1,000 on account. This error had not yet been corrected on December 31.
3.		After a physical count, inventory on hand at December 31, 2020, was $77,000. (Use "Inventory" account for closing out the beginning inventory amount and recording the ending inventory amount.)
4.		Prepaid insurance contains the premium costs of two policies: Policy A, cost of $1,320, two-year term, taken out on April 1, 2020; Policy B, cost of $1,620, three-year term, taken out on September 1, 2020.
5.		The regular rate of depreciation is 10% of cost per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no retirements during the year. On December 31, 2019, the balance of Equipment was $90,000.
6.		On April 1, 2020, Imagine issued at par value 50 $1,000, 11% bonds maturing on April 1, 2024. Interest is paid on April 1 and October 1.
7.		On August 1, 2020, Imagine purchased at par value 18 $1,000, 12% Legume Inc. bonds, maturing on July 31, 2022. Interest is paid on July 31 and January 31.
8.		On May 30, 2020, Imagine rented a warehouse for $1,100 per month and debited Prepaid Rent for an advance payment of $13,200.
9.		Imagines FV-NI investments consist of shares with total market value of $9,400 as at December 31, 2020.
10.		The FV-OCI investment is an investment of 500 shares in Yop Inc., with current market value of $25 per share as of December 31, 2020.

(a)

Prepare the year-end adjusting and correcting entries for December 31, 2020, using the information given. Record the adjusting entry for inventory using a Cost of Goods Sold account.