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12. Adjusting and closing entries. The following trial balance was taken from the books of FUN Corporation on December 31, 20x7. 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 Equipment 100,000 Accumulated Depreciation--Equip. 15,000 Accounts Payable 10,800 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. a. Insurance expired during the year, $2,000. b. Estimated bad debts, 1% of gross sales. c. Depreciation on equipment, 10% per year on original cost. d. Interest at 6% is receivable on the note for one full year. *e. Rent paid in advance at December 31, $5,400 (originally charged to expense). f. Accrued salaries and wages at December 31, $5,800. Instructions (a) Prepare the necessary adjusting entries. (b) Prepare the necessary closing entries.

THIS IS MY ANSWER AND MY TEACHER SAYS ITS WRONG CAN YOU PLEASE HELP:

12.A)

a. INSURANCE EXPENSE 2,000

PREPAID INSURANCE 2,000

b. BAD DEBTS EXPENSES 800

ALLOWANCE FOR DOUBTFUL ACCOUNTS 800

c. DEPRECIATION EXPENSE 10,000

ACCUMULATED DEPRECIATION-EQUIPMENT 10,000

d. INTEREST RECEIVABLE 600

TO INTEREST ON NOTES RECEIVABLE 600

e. PREPAID RENT 5,400

RENT EXPENSE 5,400

f. SALARIES AND WAGES EXPENSES 5,800

SALARIES AND WAGES PAYABLE 5,800

B)

CLOSING ENTRIES

SALES 260,000

INTEREST INCOME 600

INCOME SUMMARY 260,600

(TO CLOSE SERVICE REVENUE ACCOUNT)

INCOME SUMMARY 202,000

COST OF GOOD SOLD 126,000

SALARIES ND WAGE EXPENSE 55,800

RENT EXPENSE 7,400

INSURANCE EXPENSE 2,000

DEPRECIATION EXPENSE 10,000

BAD DEBT EXPENSE 800

(TO CLOSE ALL EXPENSE ACCOUNTS)

INCOME SUMMARY 58,600

RETAINED EARNINGS 58,600

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