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The following trial balance was taken from the books of Aaron Alvarez Corporation on December 31, 2020.
| Account | Debit | Credit |
| Cash | $ 9,000 | |
| Accounts Receivable | 40,000 | |
| Notes Receivable | 10,000 | |
| Allowance for Doubtful Accounts | | $1,800 |
| Inventory | 34,000 | |
| Prepaid Insurance | 4,800 | |
| Prepaid rent | 12,800 | |
| Equipment | 100,000 | |
| Accumulated Depreciation -Equipment | | 15,000 |
| Accounts Payable | | 10,800 |
| Common Stock | | 4,000 |
| Additional paid-in capital | | 40,000 |
| Retained Earnings | | 55,000 |
| Sales Revenue | | 260,000 |
| Cost of Goods Sold | 126,000 | |
| Salaries and Wages Expense | 50,000 | - |
| | $386,600 | $386,600 |
At year end, the following items have not yet been recorded.
a. Insurance expired during the year, $2,000.
b. Allowance for bad debt should be $9,800.
c. Depreciation on equipment, 10% per year on original cost.
d. Interest on note receivable of 6%.
e. Rent paid in advance at December 31, should be $5,400.
f. Accrued salaries and wages at December 31, $5,800.
g. Dividends in the amount of $2,000 have been declared but not paid.
Instructions
(a) Prepare the necessary adjusting entries. (No journal entry descriptions required).
(b) Prepare the necessary closing entries. (No journal entry descriptions required).
Answer & Explanation
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