60.1K

Verified Solution

Link Copied!

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 Solved by verified expert

See Answer