Fall Back Inc. is a merchandising business headquartered in the U.S. and selling primarily to wholesalers. The accounting information system is based upon the principles and rules of U.S. Generally Accepted Accounting Principles (GAAP). Business activity is recorded on an accrual basis. The company employs the perpetual inventory system in accounting for its merchandise inventory. Sales revenue is recorded at the point of sale net of customer discounts. Purchases of inventory are recorded at invoice price. Fall Back operates using a January through December fiscal year. The balances of the accounts in the general ledger as of November 30 of the current fiscal year are as follows: (Assume all balances are normal balances.)

Cash 65,900

Accounts Receivable 200,200

Allowance for bad debts 2,110

Allowance for sales returns 1,900

Inventory 376,400

Estimated Returns Inventory 0

Supplies 12,100

Prepaid Insurance 30,000

Investments in Available for sale securities: Noncurrent (net) 18,300

Land 140,000

Equipment 997,100

Accumulated Depreciation--Equip. 289,600

Deferred Tax Asset 0

Accounts Payable 111,300

Salaries Payable 0

Refund liability 0

Deferred Rent Revenue 33,200

Notes Payable (due in 8 months) 50,000

Interest Payable 0

Income taxes payable 0

CommonStock, $1 Par 100,000

Additional paid in capital 59,000

Retained Earnings 600,800

Accumulated Other Comprehensive Income/(Loss) 1,200

Income Summary 0

Dividends 75,000

Sales 4,381,190

Sales returns 79,200

Cost of Goods Sold 2,122,100

Sales Salaries Expense 650,600

Advertising Expense 220,000

Delivery Expense 36,000

Depreciation Expense--Equip. 29,600

Miscellaneous Selling Expense 42,800

Office Salaries Expense 407,000

Rent Expense 125,000

Insurance Expense 0

Supplies Expense 0

Bad debts expense 0

Income taxes expense 0

Rent Revenue 0

Interest Expense 3,000

There are 100,000 shares of common stock outstanding. During December, the last month of the fiscal year, the following transactions were completed:

Dec.1 Received $3,000 in advance payment for December, January, and February rent of warehouse space.

Purchased $24,500 of merchandise on account, FOB shipping point, terms2/10,n/30.

Paid transportation costs of $475 on the December 3 purchase.

Returned $4,000 of the merchandise purchased on December 3.

Sold merchandise on account, $12,700, FOB destination, 2/15,n/30. The cost of the merchandise sold was $7,600.

Paid transportation charges of $300 for the merchandise sold on December 11.

Paid for the purchase of December 3 less the return and the discount.

Received payment from customers on account, $8,430. Amount received is net of discount.

Received payment on account for the sale of December 11, less the discount.

Purchased supplies on account, n/30 $500.

Paid sales salaries, $2,300, and office salaries, $1,400.

Sold merchandise for cash, $16,500. The cost of the merchandise sold was $11,200.

Paid rent on parking lot for December, $1,000,

Paid cash for a web page advertisement, $400.

Prepare an Income Statement after adjusting entries.