On December 31, 2011, Information Inc. completed its third year of operations. The following list of account balances (which are not arranged in any particular order) was assembled by a student working in the company's business office on a part-time basis while taking his first accounting course:

1. The amount shown as insurance expense includes $900 for coverage during the first two months of 2012.
2. The note receivable is a six-month note that has been outstanding for four months. The interest rate is 10% per year. The interest will be received by the company when the note becomes due at the end of February 2012.
3. As of December 31, 2011, the office supplies still on hand are worth $600.
4. On November 1, 2011, the company rented surplus space in its building to a tenant for $ 1,000 per month, payable in advance for six months.
5. Depreciation for 2011 is $10,000 on the building and $20,000 on the equipment.
6. Employees earned $3,000 of salaries in December 2011 that will not be paid until the first scheduled pay day in 2012.
7. Additional dividends of $50,000 were declared in December 2011, but will not be paid until January 2012.
Required:
a. Determine the amounts that would appear in an adjusted trial balance for Information Inc. as of December 31, 2011.
b. Prepare a statement of earnings for the year ended December 31, 2011.
c. Calculate the amount of retained earnings as of December 31, 2011.
d. Prepare a classified statement of financial position as of December 31, 2011.

Transcribed Image Text:

Accounts receivable Interest expense Note receivable Cost of goods sold Share capital Building Accumulated depreciation $150,000 Advertising expense $ 76,000 20,000 40,000 12,000 6,000 6,300 2,000 Cash 26,000 590,000 570,000 360,000 Merchandise inventory Dividends declared Unearned rent revenue Insurance expense Retained earnings equipment Land 20,000January , 2011) 160,000 Equipment 177,000 200,000 5,200 Accumulated depreciation, Miscellaneous expense building Sales Telecommunications expense Note payable 40,000 963,000 Accounts payable 2,500 30,000 Salaries expense Office supplies inventory 72.700 125,000 3,700