A partial trial balance of Opticar Corp. is as follows on December 31, 2007.

Additional adjusting data:
1. A physical count of supplies on hand on December 31, 2007, totaled $6,500.
2. Through oversight, the sales salaries of $4,000 were not accrued as of December 31, 2007.
3. The Interest Receivable on Investments account was left unchanged during 2007. Accrued interest on investments amounts to $2,800 on December 31, 2007.
4. The unexpired portions of the insurance policies totaled $42,000 as of December 31, 2007.
5. $36,000 was paid on January 1, 2007 for the rent of a building for through the end of 2008.
6. A further review of depreciation calculations of prior years revealed that depreciation was overstated by $45,000. It was decided that this oversight should be corrected by a prior period adjustment.

Instructions
(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2007? (Ignore income tax considerations.)
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2007? (Ignore income taxconsiderations.

Transcribed Image Text:

Dr. Cr Supplies expense Accrued salaries and wages Interest receivable on investments Insurance expense Prepaid rent Accrued interest payable S 35,000 $ 7,500 650 156,000 36,000 65,000