The following is the preclosing trial balance of Antonia Retailers, Inc.:

The following additional information is provided:

a. The company paid a salary advance of $10,000 to one of its employees, a total that was debited to the Salaries expense account. This was an advance against the employee’s salary for the year 2009.

b. On January 1, 2008, the company paid an insurance premium of $18,000, which was debited to the Insurance expense account. The premium provided insurance coverage for 18 months beginning on January 1, 2008.

c. The company decided to revise its estimate of bad debts expense by calculating it at 10%
of its sales revenue.

d. On January 1, 2009, the company’s board of directors declared an additional dividend of $10,000 for the year 2008.
Required:
1. Prepare the necessary adjusting entries for the year ended December 31, 2008.
2. Prepare an income statement for the year ended December 31, 2008.
3. Prepare a balance sheet as of December 31, 2008.

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Preclosing Trial Balance as of December 31, 2008 DR CR Cash $ 42,000 Accounts receivable 67,500 Prepaid rent Inventory 15,000 100,000 Equipment 60,000 Building 90,000 Allowance for doubtful accounts $ 5,000 Accumulated depreciation-equipment Accumulated depreciation-building Advance from customers Accounts payable 30,000 9,000 25,000 18,000 Salaries payable 4,000 Capital stock 70,000 Retained earnings 1/1/08 187,500 Sales revenue 350,000 Cost of goods sold 185,000 Salaries expense 50,000 Bad debt expense 10,500 Rent expense 30,000 Insurance expense 18,000 Depreciation expense-building 5,000 Depreciation expense-equipment 2,000 Dividends 23,500 Totals $698,500 $698,500