AP3-15A(Determining adjusted balances; preparing statement of income and statement of financial position)

On December 31, 2020, Information Inc. completed its third year of operations. Abdul Mukhtar is a student working part-time in the company's business office while taking his first accounting course. Abdul assembled the following list of account balances, which are not arranged in any particular order:

Accounts Receivable	$150,000	Advertising Expense	$76,000
Interest Expense	2,000	Cash	20,000
Notes Receivable	26,000	Inventory	140,000
Cost of Goods Sold	590,000	Dividends Declared	12,000
Common Shares	570,000	Unearned Revenue	6,000
Buildings	360,000	Insurance Expense	6,300
Accumulated Depreciation, Equipment	20,000	Retained Earnings (as at January 1, 2020)	177,000
Land	160,000	Equipment	200,000
Accumulated Depreciation, Buildings	40,000	Miscellaneous Expense	5,200
Sales	963,000	Accounts Payable	72,700
Utilities Expense	2,500	Wages Expense	125,000
Notes Payable	30,000	Supplies	3,700

These account amounts are correct, but Abdul did not consider the following information:

• 1. The amount shown as insurance expense includes $900 for coverage during the first two months of 2021.
• 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 2021.
• 3. As at December 31, 2020, the supplies still on hand had a cost of $600.
• 4. On November 1, 2020, the company rented surplus space in one of its building to a tenant for $1,000 per month. The tenant paid for six months in advance.
• 5. Depreciation for 2020 is $10,000 on the buildings and $20,000 on the equipment.
• 6. Employees earned $3,000 of wages in December 2020 that will not be paid until the first scheduled payday in 2021.
• 7. Additional dividends of $50,000 were declared in December 2020, but will not be paid until January 2021.

Required

1. a. Prepare a statement of income for the year ended December 31, 2020.

b. Calculate the amount of retained earnings as at December 31, 2020.

c. Prepare a classified statement of financial position as at December 31, 2020.