On December 1, 2023, Kelly Snow, the accountant for Ingalls, Inc. went on extended leave very unexpectedly. Seven months pregnant, she had planned to work through to the end of month eight. Sadly, over the Thanksgiving holidays, complications developed which mandated Mrs. Snow going on immediate bed rest.

Ingalls management had already hired you to temporarily take Mrs. Snows position while she was on maternity leave, but you had not planned on beginning for another two months. Ingalls is now asking that you begin work right away. Feeling sorry for Mrs. Snow and Ingalls management, you agree, even though it means rearranging some things in your schedule and doing far more work than you had planned on.

On December 8, you walk into the offices of Ingalls and prepare to get started. Here is what you know so far. Ingalls is a retail store in the Oak Court Mall that sells jewelry. Christmas is their busiest time, of course. Mrs. Snow is a very competent employee, and the books look good. Below find all the transactions that need to be posted for December. They are summarized. Also, because of time constraints, you will only be closing the books and preparing the financial statements for the month of December, not the entire year.

Please find Ingalls accounting system on canvas. You will see that it looks suspiciously like Webworks, with fewer accounts. The beginning balances in the ledger accounts from Nov. 30 are already there for you.

You only need to fill in the account numbers when you enter your entry. The account name will fill in when you run the macro.

Follow the instructions very carefully and complete each step before moving on.

Part I: Journal entries, adjusting entries, and income statement. Enter these into the accounting system provided. Press process the journal entries when done. Do not worry about entering a date for these entries. Because they are summarized, you cant.

1) Made sales of $45,689 during the month, all on account. Ingalls had originally paid $19,865 for the jewelry (merchandise inventory) that was sold.

2) Ingalls purchased merchandise inventory in the amount of $25,239 during the month. All purchases are made on account.

3) Ingalls purchased two new glass and wood display cases with cash. Each case had a purchase price of $4,875. Display cases are considered to be furniture and fixtures.

4) Expenses incurred during December and paid in cash:

a) Utilities - $670

b) Salaries and commissions of salespeople - $9,500

c) Salaries for support staff (like you) - $3,000

d) Other - $950

5) Paid $9,000 in cash for store rent for the months of December, January and February.

6) Paid $1,200 in accrued salaries payable using cash.

7) Paid $21,457 cash on the accounts payable owed to suppliers.

8) Paid $1,500 cash for ads to run in the local newspaper before Christmas and then through the middle of January for all the year-end clearances. Assume that 2/3 of the ads will run before December 31.

9) Ingalls collected $50,400 in cash on its accounts receivable.

10) On December 1, Ingalls borrowed $30,000 cash from CB&T at a rate of 8%, the market rate for similar loans.

Accruals needed for the month of December (keep in mind this is just for the month!):

1) All the equipment is being depreciated over 5 years with no salvage value.

2) All the furniture and fixtures are being depreciated over 7 years with no salvage value.

3) Unpaid sales salaries and commissions amounted to $900 and unpaid support staff salaries amounted to $400 on December 31.

4) You need to determine how to adjust the rent and advertising.

5) You will need to accrue interest expense for the loan.

6) Ingalls income tax rate is 30%.

I am not requiring a trial balance but you may prepare one if it helps you.

a) Prepare your income statement for Ingalls. They can be typed into Word or excel. Assume that Ingalls has 500 shares of stock outstanding all year.

b) Prepare your statement of stockholders equity for Ingalls.

c) Prepare closing entries.

d) Prepare a classified balance sheet.

e) Prepare the statement of cash flows using both the direct and indirect methods.