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130.Selected account balances from the December 31, 2015, trial balance of the Gracy Company are listed below:
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Debit
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Credit
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Inventory, January 1, 2015
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$12,500
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Purchases
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25,000
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Salaries Expense
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5,000
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Rent Expense
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3,250
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General and Administrative Expenses
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2,500
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Sales
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$61,000
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Dividends Declared
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3,500
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In addition, the following information is available:
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Thecost of the ending inventory at December 31, 2015, is $7,500.
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$890 of salaries have accrued as of December 31.
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On March 30, Gracy purchased a month insurance policy for $240. The purchase was debited to Prepaid Insurance.
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On December 1, the company paid 2 months' rent in advance. The $1500 payment was debited to Rent Expense.
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In December, a customer paid $1,000 in advance for merchandise that will be shipped by Gracy in 2016. The amount received was credited to Sales.
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Gracy estimates its bad debts to be 1% of sales (after all adjustments).
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The income tax rate is 30%.
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Gracy Company uses a periodic inventory system.
Required:
Using a general journal format, prepare the required adjusting entries.
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