Reference no: EM132879670
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.