Listed below are the accounts and their respective balances for J & K, Inc. at December 31, 2004:

Cash $ 50,000

Accounts Receivable 35,000

Inventory (15 @ $3,000 each) 45,000

Prepaid Insurance 5,000

Security Deposit 1,000

Furniture & Fixtures 110,000

Accumulated Depreciation 20,000

Accounts Payable 12,000

Wages Payable 7,000

Taxes Payable 5,000

Rent Payable 2,000

Note Payable 80,000

Common Stock (3,000 shares) 30,000

Retained Earnings 90,000

During 2005 the following transactions occurred:

Paid beginning accounts payable.

Received all beginning accounts receivable.

Purchased 10 Things at $4,000 each. Paid 25% down and will pay the rest later.

Sold 18 Things for $10,000 each at 70% down (cash) and the other 30% due later.

Paid 2004 taxes payable.

Paid cash for wages of $25,000. (Includes the $7,000 owed at the end of 2004).

Received additional payments from customers of $20,000.

Paid 14 months rent, $28,000

Paid additional $10,000 to creditors.

Issued 600 shares of common stock for $6,000 on October 1^st.

Paid $2,000 advertising for 2005

Paid a $1.00 per share dividend to shareholders on December 31^st.

Paid annual payment on Note Payable of $20,000 principal plus interest at 8% on December 31^st.

Bought a piece of land for $50,000 on December 31^st, putting $10,000 down and mortgaging the rest. There are no principal payments due until 2009.

Also, during the year the company paid 50% of the 2005 taxes. The tax rate is 30%.

The Company uses the FIFO inventory system.

At December 31, 2005 the company owed $10,000 in wages which had not yet been paid.

The prepaid insurance at 12/31/04 was for a policy that had exactly two years left to run (05,06).

The Furniture & Fixtures originally cost $110,000, had a twenty year life and were expected to be worth $10,000 at the end.

The market price per share is $80.

Other adjustments?

Prepare Journal Entries, T-Accounts and Financial Statements on the pages provided in the exam. ( 195 points ) Neatness and format count!