Bruin Corporation has been authorized to issue 5,000 shares of 12 percent noncumulative, nonparticipating preferred stock with a par value of $100 per share and 200,000 shares of common stock with a par value of $10 per share. As of December 31, 2016, 2,600 shares of preferred stock and 19,000 shares of common stock had been issued. A condensed trial balance as of December 31, 2016, is provided below.

INSTRUCTIONS
1. Enter the December 31, 2016, trial balance on an eight-column worksheet. Provide three lines for the Selling Expenses control account and three lines for the General Expenses control account. Total and rule the Trial Balance columns.
2. Record the following transactions in general journal form, using page number 6:
a. Ending merchandise inventory is $115,000. Close the beginning inventory and set up the ending inventory.
b. Depreciation of buildings is $14,500 ($11,000 is selling expense; $3,500 is general expense).
c. Depreciation of equipment is $27,000 ($18,000 is selling expense; $9,000 is general expense).
d. Accrued expenses are $10,000 ($7,000 is selling expense; $3,000 is general expense).
e. The balance in Allowance for Doubtful Accounts is adequate.
f. The $49,300 balance in Income Tax Expense represents the quarterly tax deposits. Adjust the Income Tax Expense account using the following procedure:
(1) Extend the adjusted income and expense items to the Income Statement columns and compute the net income before taxes.
(2) Assuming that taxable income is the same as net income before income taxes, use the tax rates given in this chapter to compute the federal income tax. Round the computed tax to the nearest whole dollar. Ignore state and local income taxes.
3. Complete the worksheet as shown in the text.
4. Prepare a condensed income statement for the year.
5. Prepare a balance sheet as of December 31, 2016. The balance of Retained Earnings on January 1, 2016, was $171,300. All dividends for the year were declared on December 5, 2016, and are payable January 4, 2017.
6. Journalize the adjusting and closing entries on December 31. Explanations are not required.
Analyze: Assume that dividends were declared in equal amounts over the four quarters of 2016. What percentage of Bruin Corporation's annual income before tax was spent on dividends to stockholders?

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Bruin Corporation Trial Balance (Condens December 31, 2016 150 8 Allowance for Doubtful Accounts 348 Accumulated Depreciation Buildings 43 5 2 Accumulated Depreciation-Equipment 149 17 1 Dividends Payable-Common Accrued Expenses Payable 2 Preferred Stock, 12% Paid-in Capital in Excess of Par Value-Preferred 1,150 550 00 700 General Expenses Control Amortization of Organization Costs 2,021 002,021