PREPARATION OF MERCHANDISING FINANCIAL STATEMENTS. Jay Coat Company has prepared the following unadjusted trial balance as of December Ble Ox2:  lol

The following data are also available:

a) The building has an expected life of 20 years and a residual value of $29,000.

b) The cost of ending inventory is $24,200. Assume that Jay uses the periodic method of accounting for inventory.

c) Unpaid wages are $1,800 at year-end.

d) Five months’ interest at 14% on the note payable is unpaid and unrecorded at yearend.

e) Unpaid utility expense is $3,900 at year-end.

f) The income tax rate is 30%.
REQUIRED:
1. Prepare Jay Coat Company’s adjusting entries for 19x2.
2. Prepare Jay Coat Company’s income statement and statement of changes in retained earnings for 19x2 and its balance sheet at December 31, 19x2.

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ACCOUNT Cash Accounts receivable Inventory, 12/31/x1 Land Building Accumulated depreciation, building Other assets Accounts payable Notes payable (due in 10 years) DEBIT CREDIT $ 5,200 38,400 31,500 36,400 309,000 $ 42,000 21,100 21,500 60,000 Capital stock 210,000 Dividends 1,000 Retained earnings, 12/31/x1 26,000 Sales revenue 632,000 Purchases 301,000 Operating expenses (not detailed) 243,000 Interest expense 4,900 Totals $991,500 $991,500