Refer to Problem 2-35 in Chapter 2 for Singh Company.
In problem 2-35
1. On January 1, the company issued 10,000 shares for $250,000.
2. On January 2, the company borrowed $50,000 from the bank.
3. On January 3, the company purchased land and a building for a total of $200,000 cash. The land was recently appraised at a fair market value of $60,000.
4. Inventory costing $130,000 was purchased on account.
5. Sales to customers totalled $205,000. Of these, $175,000 were sales on account.
6. The cost of the inventory that was sold to customers in transaction 5 was $120,000.
7. Payments to suppliers on account totalled $115,000.
8. Collections from customers on account totalled $155,000.
9. Payments to employees for salaries were $55,000. In addition, there was $2,000 of unpaid salaries at year end.
10. The interest on the bank loan was recognized and paid each month. The interest rate on the loan was 6%.
11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the straight-line method of depreciation.
12. The company declared dividends of $7,000 on December 15, 2011, to be paid on January 15, 2012.
a. Prepare journal entries for each of the transactions and adjustments listed in the problem.
b. Prepare the necessary T accounts and post the journal entries to them.
c. Prepare an adjusted trial balance.
d. Prepare the closing entries and post them to the T accounts.