Times 12 + B CO E ACTIVITY 2 MAKING ADJUSTING ENTRIES AND STATEMENT PREPARATION The following is the preclosing trial balance of R, Inc.: Preclosing Trial Balance as of December 31, 20X1 DR CR Cash $38.700 Accounts receivable 71,600 Prepaid rent 12,000 Inventory 125,000 Equipment 50,000 Building 125,000 Allowance for doubtful accounts $3,000 Accumulated 4+ depreciation-equipment Accumulated depreciation-building Advance from customers 40,000 12,000 18,000 Accounts payable 26,000 Salaries payable 5,500 Capital stock 70,000 Retained earnings 1/1/20X1 264,850 Sales revenue 425,000 Cost of goods sold 276,250 Salaries expense 60,000 Bad debt expense 18,300 Rent expense 40,000 Insurance expense 15,000 Depreciation expense-building 6,000 Depreciation expense-equipment 3,000 Dividends 23,500 $864,35 $864,35 Totals 00 The following additional information is provided: 1. The company paid a salary advance of $5,000 to one of its employees, a total that was debited to the Salaries expense account. This was an advance against the employee's salary for the year 20X2. 2. On January 1, 20X1, the company paid an insurance premium of $15,000, which was debited to the Insurance expense account. The premium provided insurance coverage for 18 months beginning on January 1, 20X1. 3. The company decided to revise its estimate of bad debts expense by calculating it at 5% of its sales revenue. 4. On December 31, 20X1, the company's board of directors declared a dividend of $20,000, payable in January 20X2. No journal entry was recorded.