Dinah Soars, Biff Wellington and Duane Pipe are the stockholders of Sharpe Incorporated. The charter of the corporation authorized 500,000 shares of $2 par common stock, and 100,000 shares of $30 par, 4%, preferred stock. As of January 1, 2020, there were 24,000 shares of common stock issued and outstanding and 5,000 shares of preferred stock issued and outstanding.

Selected transactions completed by Sharpe Incorporated during the fiscal year-ending December 31, 2020, are as follows:

Jan 1 Issued 12,500 shares of $2 par common stock at $22, receiving cash.

Jan 1 Issued 5,800 shares of $30 par, 4%, preferred stock at $70 for cash.

Feb 1 Purchased equipment for $195,000, paying $15,000 cash and financing the remainder with a 180-day, 6% note payable.

Mar 15 Purchased land for $352,000 by issuing 20,000 shares of common stock.

Mar 31 Purchased a two-year insurance policy for $36,600.

May 1 Purchased 1,750 shares of the companys own common stock at $22 per share.

May 31 Issued $1,000,000 of 8-year, 7% bonds with interest payable semiannually. The amount of cash received was $926,896.

July 30 Paid the amount due on the note payable signed on February 1.

Aug 1 Sold 430 shares of treasury common stock purchased on May 1 for $25 per share.

Sept 15 Declared a 2% stock dividend on common stock to be distributed on September 30 to stockholders of record on September 20. The market price per share on September 15 is $25 per share.

Sept 30 Distributed the stock dividend declared September 15.

Oct 1 Borrowed $40,000 from Second Bank by issuing an 7% note. The note is to be repaid in quarterly payments of principal plus interest totaling $1,860 per quarter.

Oct 16 Sold 370 shares of treasury common stock purchased on May 1 for $18 per share.

Nov 30 Paid the semiannual interest and amortized the premium on the bonds issued on May 31.

Dec 1 Declared a cash dividend at the stated amount to preferred stockholders and .40 per share to common stockholders payable on December 30 to stockholders of record on December 16.

(Hint: dont forget the shares distributed from the stock dividend)

Dec 30 Paid the cash dividends declared on December 1.

Dec 31 Paid the first quarterly installment of the note issued on October 1.

Dec 31 Record revenue for the year of $1,975,000, received $500,000 in cash, the remainder is on account.

Dec 31 Record expenses for the year, paid in cash (one compound entry):

Rent $170,000

Utilities 13,200

Salaries 760,000

Advertising 140,000

Medical insurance 32,000

Commissions 63,000

Legal and accounting 18,000

Miscellaneous 8,400

Adjusting Entries

(1) The employees accrued vacation pay at the end of the year was $11,880.

(2) Record depreciation on the equipment purchased on February 1, using the straight-line method. The equipment has an estimated 9-year useful life and an estimated residual value of $2,760.

(3) Record insurance expired on the policy purchased March 31.

(4) Record the adjusting entry for the interest accrued and the amortization of the premium on the bonds payable since the last interest payment. (round the amount to the nearest dollar)

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Step 4 - Prepare a Trial Balance

Click on the Trial Balance tab and prepare the Trial Balance. The total of the Trial Balance should be $4,346,028. If your balance does not agree, make any necessary corrections before you proceed.

Step 5 - Prepare Adjusting Entries

Record the adjusting entries in the journal after the journal entries you recorded in step #2. Skip a line after the last entry and write Adjusting Entries in the middle of the account column then journalize the adjusting entries. You do not need an explanation, but skip a line between entries. All the adjusting entries should be dated December 31. Post the adjusting entries to the T-Accounts in Excel.

Step 6 - Prepare an Adjusted Trial Balance

Click on the Adjusted Trial Balance tab and prepare the Adjusted Trial Balance. The total of the Adjusted Trial Balance should be $4,383,321. If your balance does not agree, make any necessary corrections before you proceed.

Step 7 - Prepare the Income Statement

Click on the Income Statement tab in the Excel file to prepare the Income Statement using the amounts from the Adjusted Trial Balance. The Income Statement has been formatted using the outlined cells. Entries should only be made in the outlined cells. The exact number of rows needed are outlined so you should not add any rows or columns to the Income Statement. Net Income should be $672,951.

Step 8 Prepare a Retained Earnings Statement and Balance Sheet

Prepare the Retained Earnings Statement and the Balance Sheet the same way you did the Income Statement using the amounts from the Adjusted Trial Balance. Both statements have been formatted with the exact number of rows needed. Entries should only be made in the outlined cells; do not add any rows or columns. Total Assets should be $2,973,019.

ONLY STEPS 4 AND 6 !