Mead, Inc.

Balance Sheet

December 31, 2022

Assets

Cash ......................................................................................................... $34,500 Accounts receivable ................................................................................ 25,000 Inventory .................................................................................................. 10,000 Supplies ................................................................................................... 200 Total assets.............................................................................................. $69,700

Liabilities and Stockholders Equity

Liabilities:

Accounts payable ............................................................................. $12,000

Salaries payable ............................................................................... 1,000

Income taxes payable ...................................................................... 3,675

Total liabilities.......................................................................................... $16,675 Stockholders equity:

Capital stock (10,000 shares outstanding).................................... $25,000

Retained earnings ............................................................................ 28,025

Total stockholders equity ....................................................................... 53,025 Total liabilities and stockholders equity................................................ $69,700

Mead, Inc.

Income Statement

For the Year Ended December31,2022

Sales revenue .......................................................................................... $110,000 Rent revenue ........................................................................................... 1,000 Total revenues......................................................................................... $111,000 Less cost of goods sold........................................................................... 60,000 Gross profit ........................................................................................... $ 51,000 Less operating expenses:

_{Supplies expense .............................................................................}$ 400

Salaries expense .............................................................................. 22,000

Miscellaneous expense................................................................... 4,100 26,500 Income beforetaxes................................................................................ $ 24,500 Less income taxes................................................................................... 3,675 Net income............................................................................................... $ 20,825 Earnings per share ( $20,825 / 10,000shares) $ 2.08

Mead, Inc.

Post-Closing Trial Balance

December 31, 2022

Debits Credits

Cash ......................................................................................................... $34,500

Accounts Receivable............................................................................... 25,000

Inventory .................................................................................................. 10,000

Supplies ...................................................................................................

_{Accounts Payable....................................................................................}200_$12,000 Salaries Payable ...................................................................................... 1,000 Income TaxesPayable............................................................................. 3,675 Common Stock............................................................................................ 25,000 Retained Earnings ................................................................................... 28,025 Totals........................................................................................................ $69,700 $69,700

You are also given the following information that summarizes the business activity for the current year,2023

a. Issued 10,000 additional shares of common stock for $60,000 cash on January 1st. b. Borrowed $75,000 onMarch 1,2023,from Downtown Bank as a long-term loan. The interest rate on the loan is 5%and Interest for the year is payable on January 1, 2024.

c. Paid $12,000 cash on April1 to lease a building for one year.

d. Received $6,000 on May 1 from a tenant for one years rent.

e. Paid $4,200 on June 1 for a one-year insurance policy.

f. Purchased $3,700 of supplies for cash on June 15th.

g. Purchased inventory for $125,000 on account on July 1.

h. August 1, sold inventory for $185,000 on account; cost ofthe merchandise sold was $120,000. i. Collected $145,000 cash from customersaccounts receivable onAugust 20th.

j. September 1,Paid $95,000 cash for inventories purchased earlier during the year. k. September 20^th paid $34,000 for sales reps salaries, including $1,000 owed atthe beginning of2023. l. Dividends for $9,500 were paid onOctober 20th.

m. The income taxes payable for the year of 2022 were paid on November 15th.

n. For adjusting entries, all prepaid expenses are initially recorded asassets, andall unearned revenues are initially recorded as liabilities (this is just informational).

o. At year-end, $1,050 worth of supplies are on hand.

p. At year-end, an additional $9,500 of sales salaries are owed, but have not yet been paid. q. Prepare an adjusting entry to recognize the taxes owed for 2023. The corporate tax rate is 21% of the income before income taxes.

You are asked to do the following on an excel spreadsheet:

4. After the adjusting entries are posted, prepare an adjusted trial balance, an income statement, statement ofretained earnings and a balance sheet for 2023. The format of your statements should mirror those prepared by the company in 2022.

5. Journalize and post-closing entries for 2023 and prepare a post-closing trial balance. 6. Compute the Current Ratio and Debt to Total AssetRatio for 2022 and 2023

7. Interpretive Question: What is your overall asseMeadadnt of the financial health of Mead, Inc.? Use the Word Document provided to answer this question.