Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 2019, the firm's general ledger contained the accounts and balances that follow.

ACCOUNTS AND BALANCESCash$30,600Dr.Accounts Receivable35,700Dr.Allowance for Doubtful Accounts470Cr.Merchandise Inventory86,500Dr.Supplies10,900Dr.Prepaid Insurance6,000Dr.Office Equipment9,800Dr.Accum. DepreciationOffice Equipment2,700Cr.Warehouse Equipment36,300Dr.Accum. DepreciationWarehouse Equipment10,600Cr.Notes PayableBank34,500Cr.Accounts Payable12,700Cr.Interest PayableSocial Security Tax Payable1,730Cr.Medicare Tax Payable393Cr.Federal Unemployment Tax PayableState Unemployment Tax PayableSalaries PayablePhillip Tucker, Capital123,429Cr.Phillip Tucker, Drawing58,500Dr.Sales658,778Cr.Sales Returns and Allowances10,500Dr.Purchases352,500Dr.Purchases Returns and Allowances9,700Cr.Income SummaryRent Expense36,500Dr.Telephone Expense2,700Dr.Salaries Expense165,000Dr.Payroll Taxes Expense13,500Dr.Supplies ExpenseInsurance ExpenseDepreciation ExpenseOffice Equip.Depreciation ExpenseWarehouse Equip.Uncollectible Accounts ExpenseInterest Expense

ADJUSTMENTS

a.-b.Merchandise inventory on December 31, 2019, is $78,500.

1. During 2019, the firm had net credit sales of $565,000; past experience indicates that 0.50 percent of these sales should result in uncollectible accounts.
2. On December 31, 2019, an inventory of supplies showed that items costing $1,230 were on hand.
3. On May 1, 2019, the firm purchased a one-year insurance policy for $6,000.
4. On January 2, 2017, the firm purchased office equipment for $9,800. At that time, the equipment was estimated to have a useful life of seven years and a salvage value of $350.
5. On January 2, 2017, the firm purchased warehouse equipment for $36,300. At that time, the equipment was estimated to have a useful life of six years and a salvage value of $4,500.
6. On November 1, 2019, the firm issued a four-month, 10 percent note for $34,500.
7. On December 31, 2019, the firm owed salaries of $12,000 that will not be paid until 2020.
8. On December 31, 2019, the firm owed the employer's social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $12,000 of accrued wages.
9. On December 31, 2019, the firm owed the federal unemployment tax (assume 0.6 percent) and the state unemployment tax (assume 5.4 percent) on the entire $12,000 of accrued wages.

Required:

1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2019.
2. Enter the adjustments above in the Adjustments section of the worksheet.
3. 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, 2019?