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Prepare adjusting entries to record preceding information

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Problem - Adjusting Entries - 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 $30,000, an estimated life of 8 years, and an estimated  residual value of $2,000.

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.

Reference no: EM132879670

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