P3-6 Adjustment process and financial statements Objs 3, 4 SPREADSHEET 2. Net income. $122,600 Adjustment data for Magnum Therapeutics Inc. for the year ended May 31, 2011, are as follows: a. Wages accrued but not paid at May 31, $1,800 b. Depreciation of equipment during the year, $12,500 c. Laundry supplies on hand at May 31, $1,900 d. Insurance premiums expired, $5,500 Instructions 1. Using the following integrated financial statement framework, record each adjustment to the appropriate accounts, identifying each adjustment by its letter. After all adjustments are recorded, determine the balances. Balance Sheet Statement of Assets Liabilities + Stockholders' Equity Income Cash Flows Laundry Prepaid Laundry Acc. Accts. Wages Capital Retained Statement Cash + Supplies + Insurance + Equip. Deprec. Payable + Payable + Stock + Earnings Balances, May 31, 2011 48,000 9,000 6,000 250,000 -60,000 7,000 0 50,000 196,000 Statement of Cash Flows Income Statement Operating (Revenues) 315,000 Laundry revenue 315,000 Financing (Capital Stock) 25,000 Wages expense -110,000 Operating (Expenses) -220,000 Rent expense -30,000 Investing (Equipment) -80,000 Utilities expense -18,000 Financing (Dividends) -5,000 Misc. expense -7,500 Net increase in cash 35,000 Beginning cash balance, June 1, 2010 13,000 Ending cash balance, May 31, 2011 $48,000 2. Prepare an income statement and retained earnings statement for the year ended May 31, 2011. The retained earnings balance as of June 1, 2010, was $51,500. 3. Prepare a classified balance sheet as of May 31, 2011. 4. Prepare a statement of cash flows for the year ended May 31, 2011.