Reference no: EM132649848

Additional information:

1. Actual rent costs amounted to $1,500 per month. The company has already paid for rent for the first quarter of 2021.

2. The building was purchased and occupied on January 1, 2018, with an estimated useful life of 10 years, and residual value of $29,700. (The company uses straight-line depreciation.)

3.Prepaid insurance contains the premium costs of several policies, including Policy A, cost of $2,672, one-year term, taken out on April 1, 2020; and Policy B, cost of $2,088, three-year term, taken out on September 1, 2020.

4.A portion of Windsor's building has been converted into a snack bar that has been rented to the Swifty Corporation since July 1, 2019, at a rate of $6,900 per year payable each July 1 in advance.

5.One of the company's customers declared bankruptcy on December 30, 2020. It is now certain that the $2,800 the customer owes will never be collected. This fact has not been recorded. In addition, Windsor estimates that 5% of the Accounts Receivable balance on December 31, 2020, will become uncollectible.

6.An advance of $670 to a salesperson on December 31, 2020, was charged to Salaries and Wages Expense.

7.On November 1, 2018, Windsor issued 174 $1,000 bonds at par value. Interest is paid semi-annually on April 30 and October 31.

8.The equipment was purchased on January 1, 2018, with an estimated useful life of 14 years, and no residual value. (The company uses straight-line depreciation.)

9.On August 1, 2020, Windsor purchased at par value 40 $1,140, 9% bonds maturing on July 31, 2022. Interest is paid on July 31 and January 31.

10.The inventory on hand at December 31, 2020, was $88,800 after a physical inventory count. (Use "Inventory" account for closing out the beginning inventory amount and recording the ending inventory amount.

Question 1: Prepare adjusting and correcting entries for December 31, 2020, using the information given. Record the adjusting entry for inventory using a Cost of Goods Sold account.