Reference no: EM13861296

Presented below is the December 31, 2015 trial balance of Balderdash Inc., a boutique in Albany, New York.

Balderdash Inc.
Trial Balance
December 31, 2015
Cash	Debit	Credit
Accounts Receivable	$18,500
Allowance for doubtful accounts	32,000
Inventory, Dec. 31		$700
Prepaid Insurance	80,000
Equipment	5,100
Accumulated depreciation-equipment	84,000
Notes Payable		35,000
Common Stock		28,000
Retained earnings		80,600
Sales Revenue		10,000
Cost of goods sold	408,000
Salaries and wages expense	65,000
Advertising expense	6,700
Sales commissions expense	50,000
Supplies expense	5,000
	$754,300	$754,300

Instructions:

1. Prepare annual adjusting entries for the following (you made need to create additional accounts):

a. Equipment is depreciated using an 8-year useful life with a $5,000 salvage value using the straight-linemethod.

b. Supplies on hand at the end of the period total $1,500. Purchases of supplies are debited to SuppliesExpense.

c. Sales revenue includes a $8,500 deposit paid by a customer who special ordered merchandise. Themerchandise has not yet been shipped from the supplier and has been correctly excluded from cost of goodssold and ending inventory.

d. The notes payable accrue interest at 4.25% per year payable annually on April 1.

e. Salaries and wages earned but not yet paid to employees total $1,400.

f. Unpaid commissions earned by employees total $2,500.

g. The balance in the prepaid insurance account represents the cost of a one-year policy purchased onNovember 30.

h. Bad debt expense is estimated to be $1,250 for the year.

2. Prepare the reversing entries that should be recorded on January 1, 2016