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

Additional information:

1.

Actual rent costs amounted to $ 1,350 per month. The company has already paid for rent for the first quarter of 2021.

2.

The building was purchased and occupied on January 1, 2018, with an estimated useful life of 20 years, and residual value of $ 31,800. (The company uses straight-line depreciation.)

3.

Prepaid insurance contains the premium costs of several policies, including Policy A, cost of $ 2,648, one-year term, taken out on April 1, 2020; and Policy B, cost of $ 2,088, three-year term, taken out on September 1, 2020.

4.

A portion of Sage Hills building has been converted into a snack bar that has been rented to the Sheffield Corp. since July 1, 2019, at a rate of $ 6,950 per year payable each July 1 in advance.

5.

One of the companys customers declared bankruptcy on December 30, 2020. It is now certain that the $ 2,100 the customer owes will never be collected. This fact has not been recorded. In addition, Sage Hill estimates that 5% of the Accounts Receivable balance on December 31, 2020, will become uncollectible.

6.

An advance of $ 620 to a salesperson on December 31, 2020, was charged to Salaries and Wages Expense.

7.

On November 1, 2018, Sage Hill issued 174 $ 1,000 bonds at par value. Interest is paid semi-annually on April 30 and October 31.

8.

The equipment was purchased on January 1, 2018, with an estimated useful life of 10 years, and no residual value. (The company uses straight-line depreciation.)

9.

On August 1, 2020, Sage Hill purchased at par value 42 $ 1,360, 8% bonds maturing on July 31, 2022. Interest is paid on July 31 and January 31.

10.

The inventory on hand at December 31, 2020, was $ 88,800 after a physical inventory count. (Use "Inventory" account for closing out the beginning inventory amount and recording the ending inventory amount.)

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.)

No.

Account Titles and Explanation

Debit

Credit

Debit Credit Cash $ 17,120 103,100 $3,490 Accounts receivable Allowance for doubtful accounts Inventory Prepaid insurance Bond investment at amortized cost 60,400 4,736 57,120 31,700 155,900 Land 12.410 33.240 6,648 16,700 Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Goodwill Accounts payable Bonds payable (20-year, 8%) Common shares Retained earnings Sales revenue 100,200 174,000 115.100 61,763 187,500 Rent revenue 10,425 Rent expense 20,250 10,200 97.000 Supplies expense Purchases Purchase discounts Salaries and wages expense 930 53,000 Interest expense 12,000 $672,466 $ 672.466