ACT 312 A - Problem 2 (21 points total)

13119619"! 2. i2] pomis 10:01). The following trial balance was taken from the books of Eaton Corporation on December 3 1, 2003. Debits Credits Cash $10,000 Accounts Receivable 40,000 Note Receivable 7,000 Allowance for Doubtful Accounts $ 1,800 Inventory, January 1, 2003 51,000 Unexpired Insurance 4,800 Furniture and Equipment 120,000 Accumulated Depreciation of F&E 15,000 Accounts Payable 10,800 Common Stock 44,000 Retained Earnings 65,000 Sales 290,000 Purchases 131,000 Salaries Expense 50,000 Rent Expense 12,800 Totals $426,600 $426,600 At year end, the following items have not yet been recorded: (1) Insurance expired during the year, $3,500 (2) Estimated bad debts, 2% of gross sales (3) Depreciation on furniture and equipment, 15% per year (4) Interest at 7% is receivable on the note for one full year (5) Accrued salaries at December 31, $6,200 (6) Inventory December 31, $50,000 (periodic inventory procedure) Instructions: (a) Prepare the necessary adjusting entries. (b) Prepare the necessary closing entries