Bruin Corporation has been authorized to issue $5,000$ shares of $12$ percent noncumulative, nonparticipating preferred stock with a par value of $$100$ per share and $200,000$ shares of common stock with a par value of $$10$ per share. As of December $31,20$X$1,1,700$ shares of preferred stock and $25,000$ shares of common stock had been issued. A condensed trial balance as of December $31,20$X$1,$ is provided below.

Bruin Corporation

Trial Balance $($Condensed$)$

December $31,20$X$1$

Account Name Debit Credit

Cash $ $46,470\mathrm{.}00$

Accounts Receivable $149,700\mathrm{.}00$

Allowance for Doubtful Accounts $ $1,900\mathrm{.}00$

Income Tax Refund Receivable

Inventory $102,000\mathrm{.}00$

Land $111,000\mathrm{.}00$

Buildings $352,800\mathrm{.}00$

Accumulated Depreciation$$Buildings $44,100\mathrm{.}00$

Equipment $272,000\mathrm{.}00$

Accumulated Depreciation$$Equipment $27,200\mathrm{.}00$

Accounts Payable $168,020\mathrm{.}00$

Dividends Payable$$Preferred $20,400\mathrm{.}00$

Dividends Payable$$Common $22,500\mathrm{.}00$

Accrued Expenses Payable

Income Tax Payable

Preferred Stock, $12\%170,000\mathrm{.}00$

Paid$-$in Capital in Excess of Par Value$$Preferred $17,000\mathrm{.}00$

Common Stock $250,000\mathrm{.}00$

Retained Earnings $122,500\mathrm{.}00$

Sales $($Net$)1,095,550\mathrm{.}00$

Purchases $590,000\mathrm{.}00$

Selling Expenses Control $165,000\mathrm{.}00$

General Expenses Control $78,900\mathrm{.}00$

Amortization of Organization Costs

Income Tax Expense $71,300\mathrm{.}00$

Income Summary

Totals $ $1,939,170\mathrm{.}00$ $ $1,939,170\mathrm{.}00$

Additional information:

Ending merchandise inventory is $$116,000.$ Close the beginning inventory and set up the ending inventory.

Depreciation of buildings is $$14,700($$$11,100$ is selling expense; $$3,600$ is general expense$).$

Depreciation of equipment is $$27,200($$$18,100$ is selling expense; $$9,100$ is general expense$).$

Accrued expenses are $$7,800($$$5,900$ is selling expense; $$1,900$ is general expense$).$

The balance in Allowance for Doubtful Accounts is adequate.

The $$71,300$ balance in Income Tax Expense represents the quarterly tax deposits. Adjust the Income Tax Expense account using the following procedure:

$(1)$ Extend the adjusted income and expense items to the Income Statement columns of the worksheet and compute the net income before taxes.

$(2)$ Assume that the federal corporate income tax is $$71,390.$ Ignore state and local income taxes.

Required:

$1.$ & $3.$ Complete the worksheet. Enter the values of Selling Expenses control account and General Expenses control account individually.

$2.$ Prepare the general journal entries from the above transactions as of December $31,20$X$1.$

$4.$ Prepare a condensed income statement for the year.

$5.$ Prepare a balance sheet as of December $31,20$X$1.$ The balance of Retained Earnings on January $1,20$X$1,$ was $$165,400.$ All dividends for the year were declared on December $5,20$X$1,$ and are payable January $4,20$X$2.$

$6.$ Journalize the closing entries on December $31.$

Analyze:

Assume that dividends were declared in equal amounts over the four quarters of $20$X$1.$ What percentage of Bruin Corporation$$s annual income before tax was spent on dividends to stockholders?

Question $2$ of $3$ Total $2$ of $3$