Now assume that COMPANY 2 has the following transactions in 20X7. Unless specified, assume all sales and purchases are on account (i.e., receivables and payables). Assume the company adopts an expected sale return rate of 2% (again, based on the historic information for COMPANY 1).

1. Issued common stock for 100,000 in buildings and equipment and 75,000 in cash.

2. Purchased inventory on account, 77,470.

3. Paid for freight in with cash (inventory shipping), 6,350.

4. Paid a cash advance for business insurance for the year, 7,500

5. Purchased supplies for cash, 20,000.

6. Sold products that cost 49,500 to customers for 82,500.

7. Paid cash for shipping cost of sale, 5,775.

8. Received payment in cash from customer. Discount of 825, cash of 81,675 received.

9. Paid cash of 77,470 for previous on account purchase.

10. Purchased inventory on account, 117,852.

11. Paid for freight in with cash (inventory shipping), 9,660.

12. Sold products that cost 79,200 to customers for 132,000.

13. Paid cash for shipping cost of sale, 9,235.

14. Purchased additional supplies for cash, 10,000.

15. Customer returned products costing 924. The sales return amount is 1,540.

16. Paid salaries in cash, 6,250

17. Received payment in cash from customer. Discount of 1,305, cash of 129,155 received.

18. Sold products that cost 52,800 to customers for 57,750.

19. Paid cash for shipping cost of sale, 6,163.

20. Paid cash of 117,852 for previous on account purchase.

21. Products costing 1,320 were returned by customers, the sale price for the returned goods is 2,200.

22. Received payment in cash from customer. Discount of 578, cash of 57,172 received.

23. Products costing 1,386 were returned by customers, the sale price for the returned goods is 2,310.

24. Purchased inventory on account, 57,950.

25. Paid for freight in with cash (inventory shipping), 4,750.

26. Sold products that cost 46,200 to customers for 77,000.

27. Paid cash for shipping cost of sale, 5,390.

28. Returned damaged inventory, $3,050.

29. Received professional services on account (accounting and legal), 3,250.

30. Paid cash for advertising costs for the year, 5,000.

31. Supplies of $26,250 were used during the year.

32. Customer returned products costing 792. The sales return amount is 1,320.

33. Recognized salaries incurred at the end of the year, but not yet paid, 6,250.

34. Recognize insurance used for the year, 7,500.

35. Depreciation recognized for buildings and equipment, 15,000.

Required: 1) Journalize and post the above transactions.

2) Prepare an Adjusted Trial Balance (adjusting entries are included in the list of transactions above.)

3) Prepare an Income Statement, Statement of Retained Earnings, and Balance Sheet for COMPANY 2

4) Prepare closing entries.