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The following trial balance was taken from the books of Fisk Corporation on December 31, 2020.
Account Debit Credit
Cash $ 9,000
Accounts Receivable 40,000
Notes Receivable 10,000
Inventory 34,000
Prepaid Insurance 4,800
Equipment 100,000
Accumulated Depreciation--Equip. 15,000
Accounts Payable 12,600
Common Stock 44,000
Retained Earnings 55,000
Sales Revenue 260,000
Cost of Goods Sold 126,000
Salaries and Wages Expense 50,000
Rent Expense 12,800
Totals $386,600 386,600
At year end, the following items have not yet been recorded:
1) Estimated bad debts, 5% of accounts receivable.
2) Depreciation on equipment, 10% per year on original cost.
3) Interest at 6% is receivable on the note for one full year.
Assume that the firm uses the Allowance For Doubtful Accounts
Questions:
(a) Prepare the necessary adjusting entries.
(b) Prepare the necessary closing entries. Then, compute ending balance of Retained Earnings? Show your calculation.
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