Page one: Prepare adjusting entries

Page two: Multi step income statement with 40% income tax

General Journal Date Description a. Dec. 31 Interest Expense Interest Payable To record interest on note 1. Dec. 31 Interest Expense Interest Payable To accrue interest on note 2. b. Feb. 2 Notes Payable Interest Payable Interest Expense Cash To record payment of Note 2. Mar. 15 Notes Payable Interest Payable Interest Expense Cash To record payment of Note 1. c. Dec. 31 Interest Expense Interest Payable To record interest on Note 3. Dec. 31 Interest Expense Interest Payable To record interest on Note 4. Debit Credit BOWDEN CORPORATION Income Statement For the Year Ended December 31 Sales Revenue Cost of Goods Sold Gross Profit on Sales Selling Expenses Administrative Expenses Operating Income Loss on Sale of Equipment Income before Taxes and Extraordinary Item Income Tax Expense Income before Extraordinary Item Extraordinary Item Earthquake Loss Net Income Earnings per share of Common Stock