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

		Debit		Credit
Cash		$17,560
Accounts receivable		105,300
Allowance for doubtful accounts				$3,220
Inventory		59,800
Prepaid insurance		4,620
Bond investment at amortized cost		53,760
Land		31,300
Buildings		154,905
Accumulated depreciationbuildings				16,814
Equipment		34,800
Accumulated depreciationequipment				6,960
Goodwill		16,350
Accounts payable				100,800
Bonds payable (20-year, 7%)				174,000
Common shares				120,800
Retained earnings				53,086
Sales revenue				188,500
Rent revenue				11,025
Rent expense		21,150
Supplies expense		10,700
Purchases		98,600
Purchase discounts				790
Salaries and wages expense		54,200
Interest expense		12,950
		$675,995		$675,995

Prepare 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1. Prepaid insurance contains the premium costs of several policies, including Policy A, cost of $2,604, one-year term, taken out on April 1, 2020; and Policy B, cost of $2,016, three-year term, taken out on September 1, 2020.

2. One of the company's customers declared bankruptcy on December 30, 2020. It is now certain that the $2,300 the customer owes will never be collected. This fact has not been recorded. In addition, Sage Hill estimates that 3% of the Accounts Receivable balance on December 31, 2020, will become uncollectible.