Aber Corporation€™s balance sheet at December 31, 2009, is presented below.

During 2010, the following transactions occurred.
1. Aber paid $3,000 interest on the bonds on January 1, 2010.
2. Aber purchased $241,100 of inventory on account.
3. Aber sold for $450,000 cash inventory which cost $250,000. Aber also collected $27,000 sales taxes.
4. Aber paid $230,000 on accounts payable.
5. Aber paid $3,000 interest on the bonds on July 1, 2010.
6. The prepaid insurance ($5,600) expired on July 31.
7. On August 1, Aber paid $10,200 for insurance coverage from August 1, 2010, through
July 31, 2011.
8. Aber paid $17,000 sales taxes to the state.
9. Paid other operating expenses, $91,000.
10. Retired the bonds on December 31, 2010, by paying $48,000 plus $3,000 interest.
11. Issued $90,000 of 8% bonds on December 31, 2010, at 104. The bonds pay interest every June 30 and December 31.
Adjustment data:
1. Recorded the insurance expired from item 7.
2. The equipment was acquired on December 31, 2009, and will be depreciated on a straight-line basis over 5 years with a $3,000 salvage value.
3. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
Instructions
(You may want to set up T accounts to determine ending balances.)
(a) Prepare journal entries for the transactions listed above and adjusting entries.
(b) Prepare an adjusted trial balance at December 31, 2010.
(c) Prepare an income statement and a retained earnings statement for the year ending December 31, 2010, and a classified balance sheet as of December 31,2010.

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ABER CORPORATION Balance Sheet December 31, 2009 Cash Inventory Prepaid insurance Equipment $13,750 3,000 50,000 20,000 $13,100 $99,850 $30,500 Accounts payable 25,750 Bod interest payable 5,600 Bonds payable 38,000 Common stock $99,850 Retained carnings