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Your examination of Sullivan Company$$s records provides the following information for the December $31,$ year$-$end adjustments:

$1.$ Bad debts are to be recorded at $2\%$ of sales. Sales made on credit totaled $$25,000$ for the year.

$2.$ Salaries at year$-$end that have accumulated but have not been paid total $$1,400.$

$3.$ Annual straight$-$line depreciation for the company$$s equipment is based on a cost of $$29,000,$ an estimated life of $8$ years, and an estimated residual value of $$1,000.$

$4.$ Prepaid insurance in the amount of $$800$ has expired.

$5.$ Interest that has been earned but not collected totals $$500.$

$6.$ The company has satisfied performance obligations entitling it to rent in the amount of $$1,000.$

$7.$ Interest on a note payable that has accumulated but has not been paid totals $$600.$

$8.$ The income tax rate is $30\%$ on current income and is payable in the first quarter of the next year. The pretax income before the preceding adjusting entries is $$6,800.$

Required:

Prepare the adjusting entries to record the preceding information.

CHART OF ACCOUNTS

Sullivan Company

General Ledger

ASSETS

$111$ Cash

$121$ Accounts Receivable

$122$ Allowance for Doubtful Accounts

$127$ Interest Receivable

$141$ Inventory

$152$ Prepaid Insurance

$181$ Equipment

$189$ Accumulated Depreciation

LIABILITIES

$211$ Accounts Payable

$224$ Interest Payable

$231$ Salaries Payable

$250$ Unearned Rent

$261$ Income Taxes Payable

EQUITY

$311$ Common Stock

$331$ Retained Earnings

REVENUE

$411$ Sales Revenue

$421$ Rent Revenue

$431$ Interest Revenue

EXPENSES

$500$ Cost of Goods Sold

$511$ Insurance Expense

$512$ Utilities Expense

$521$ Salaries Expense

$532$ Bad Debt Expense

$540$ Interest Expense

$541$ Depreciation Expense

$559$ Miscellaneous Expenses

$910$ Income Tax Expense

Prepare the adjusting entries on December $31.$

General Journal Instructions

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