Sofia Wholesale Ltd. was incorporated on January 1, 2020. The following transactions occurred in 2020:

1. On January 1, the company issued 100,000 common shares for $3 per share.

2. On January 2, the company purchased equipment for $120,000, paying $50,000 cash and financing the balance using a note payable. The note has a one-year term, with interest of 6% payable at maturity.

3. On January 2, the company paid $4,800 for a two-year insurance policy covering the new equipment.

4. Inventory costing $185,000 was purchased on account.

5. Sales to customers totalled $278,000, of which $192,000 were on account. The cost of the inventory that was sold to customers was $153,000.

6. Collections from customers totalled $166,000.

7. Paid $78,000 on accounts due to suppliers.

8. Employees earned wages totalling $119,000, of which $22,000 remained unpaid at the end of the year.

9. Rent payments for the year amounted to $54,600, which was for 12 months plus one month’s rent as a damage deposit.

Adjusting entries:

10. The company recorded the insurance expense for the year.

11. The interest on the note payable was recorded.

12. The equipment was estimated to have a useful life of five years and a residual value of $12,000. The company uses the straight-line method of depreciation.

13. On December 20, 2020, the company’s board declared dividends of $15,200 to be paid on January 20, 2021.

Required

a. Prepare journal entries for each of the transactions and adjustments listed in the problem.

b. Prepare the necessary T accounts and post the journal entries to them.

c. Prepare an adjusted trial balance.

d. Prepare the closing entries and post them to the T accounts.