Gigi and Sue started Granny Apple Delicious, Inc., on January 1, 2011, to sell their famous applesauce. The following transactions occurred during the year:

a. Gigi and Sue started the business by contributing $15,000 each in exchange for common stock on January 1.

b. Also on January 1, the company borrowed $20,000 from Local Bank at 5.5%. The loan was for one year.

c. The company purchased $10,000 worth of apples and other inventory for cash during the year.

d. The company grew and needed to rent a shop. It paid $27,000 for rent on the shop for 18 months, beginning July 1.

e. Granny Apple Delicious, Inc., sold $36,000 worth of applesauce for cash during the first fiscal year. Of the inventory purchased in item (c) only $1,000 remained at year end.

f. During the year, Granny Apple Delicious, Inc., paid $1,525 in operating expenses.

Requirements

1. Post the preceding transactions to T-accounts to determine the balance of each account on December 31, 2011; include any adjusting transactions necessary.

2. Prepare the adjusted trial balance, the income statement, statement of changes in shareholders’ equity, balance sheet, and a statement of cash flows at year end.

3. Prepare the closing entries and the postclosing trial balance at year end.