ADJUSTMENTS

a$.-$b$.$ Merchandise inventory on December $31,201,$ is $$78,000.$

c$.$ During $20$X$1,$ the firm had net credit sales of $$560,000$; past experience indicates that $0\mathrm{.}5$ percent of these sales should result in uncollectible accounts.

d$.$ On December $31,20$X$1,$ an inventory of supplies showed that items costing $$1,180$ were on hand.

e$.$ On May $1,20$X$1,$ the firm purchased a one$-$year insurance policy for $$5,400.$

f$.$ Three years ago the firm purchased office equipment for $$8,300.$ At that time, the equipment was estimated to have a useful life of six years and a salvage value of $$350.$

g$.$ Three years ago the firm purchased warehouse equipm for $$28,000.$ At that time, the equipment was estimated to have a useful life of five years and a salvage value of $$4,000.$

h$.$ On November $1,201,$ the firm issued a four$-$month, $12$ percent note for $$32,000.$

i$.$ On December $31,201,$ the firm owed salaries of $$5,000$ that will not be paid until $202.$

j$.$ On December $31,20$X$1,$ the firm owed the employer's social security tax $($assume $6\mathrm{.}2$ percent$)$ and Medicare tax $($assume $1\mathrm{.}45$ percent$)$ on the entire $$5,000$ of accrued wages.

k$.$ On December $31,20$X$1,$ the firm owed the federal unemployment tax $($assume $0\mathrm{.}6$ percent$)$ and the state unemployment tax $($assume $5\mathrm{.}4$ percent$)$ on the entire $$5,000$ of accrued wages.

Required:

Prepare the Trial Balance section of a $10-$column worksheet. The worksheet covers the year ended December $31,201.$

Enter the adjustments above in the Adjustments section of the worksheet.

Complete the worksheet.

Analyze:

When the financial statements for Healthy Eating Foods Company are prepared, what net income will be reported for the period ended December $31,20$X$1?$