Smith Manufacturing, Inc. has asked that you assist with some bookkeeping services. The company is nearing year-end and needs help to prepare adjusting and closing entries. Following is the information that you need to prepare the entries:
- Bad debts are estimated at 1% of Net Sales.
- There is an $8,000 balance of unexpired insurance in the Prepaid Insurance account.
- A physical inventory determined that there is $40,000 balance in inventory.
- Buildings are depreciated on a straight-line basis over 20 years, no salvage value.
- Equipment is depreciated on a straight-line basis over ten years, no salvage value.
- All interest remained unpaid at year-end.
- There was $2,000 in salaries payable at year-end.