The following is the trial balance of the OXI Company as of December 31:

The following is the trial balance of the OXI Company as of December 31:

                          OXI Company

                          Trial Balance

                          December 31

                                                Debit             Credit

Cash                                   $72,800

Accounts Receivable             165,300

Allowance for Doubtful Accounts                      $2,800

Inventory, December 31            314,900

Prepaid Insurance                       20,100

Equipment                               330,600

Accumulated Depreciation – Equipment           137,800

Notes Payable                                        110,200

Common Stock                                      317,200

Retained Earnings                                    39,400

Sales                                                     2,361,600

Cost of Goods Sold                  1,566,500

Sales Salaries Expense              196,800

Advertising Expense                    26,400

Administrative Salaries Expense   255,800

Office Expense                            19,800

                                             $2,969,000   $2,969,000

Additional Information:

1. Estimated bad debt expense for the year is $5,510.

2. Equipment is depreciated using the straight-line method over the estimated life of 10 years with zero estimated salvage value.

3. During the year, $10,050 of the prepaid insurance expired.

4. During the year, $13,220 of interest on the notes payable accrued.

5. $9,450 of sales salaries were earned towards the end of the year but not recorded.

6. The company paid $2,760 for advertising in advance with will be used during the next year.

7. At the end of the year, $5,940 of office supplies was on hand. All purchases of office supplies are charged to Office Expense when purchased.

8. The company ends its accounting year on December 31.

 

Instructions:

 

1. Prepare the annual adjusting journal entries necessary as of December 31.

 

2. Prepare the annual closing journal entries necessary to close the books for the year.