You have been assigned to examine the fin ancial statements of Sarasota Com pany for the year ended December 31, 2017. You discover the following situations. 1. Depreciation of $3,500 for 2017 on delivery vehicles was not recorded. 2. The physical inventory count on Decem ber 31, 2016, im properly excluded merchandise costing $17,900 that had been temporarily stored in a public warehouse. Sarasota uses a periodic in ventory system. 3. A collection of $5,400 on account from a customer received on December 31, 2017, was not recorded until January 2, 2018 4. In 2017, the company sold for $3,600 fully depreciated equipment that origin ally cost $24,000. The com pany credited the proceeds from the sale to the Equipment account. 5. During November 2017, a competitor company filed a patent-infringement suit against Sarasota claiming dama?es of $231,200. The company's legal counsel has indicated that an unfavorable verdict is probable and a reasonable estimate of the court's award to the com petitor is $128,900. The company has not reflected or disclosed this situation in the financial statements Sarasota has a portfolio of trading investments. No entry has been made to adjust to market. Information on cost and fair value is as follows. 6. Fair Value December 31, 2016 December 31, 2017 $89,700 $79,900 $89,700 $78,000 7. At December 31, 2017, an analysis of payroll information shows accrued salaries of $11,900. The Salaries and Wages Payable account had a balance of $16,900 at December 31, 2017, which was unchanged from its balance at Decem ber 31, 2016 Alarge piece of equipment was purch ased on January 3, 2017, for $41,400 and was charged to Mainten ance and Repairs Expense. The equipment is estim ated to have a service life of 8 years and no residual 8. value. Sarasota normally uses the straight-line depreciation method for this type of equipment. A 11,400 insurance premium paid on July 1, 2016, for a policy that expires on June 30, 2019, was charged to insurance expense. Atrademark was acquired at the begin ning of 2016 for $53,600. No am ortization has been recorded since its acquisition. The maximum allowable am ortization period is 10 years. 9. 10. Assume the trial balance has been prepared but the books have not been dosed for 2017. Assuming all amounts are material, prepare journal entries showing the adjustments that are required. (Ignore income tax considerations.) (Credit account titles are automatically inden ted 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.)
