QUESTION 11 Ricardo Smelly is the owner and operator of Smelly s Sales Company and the company has presented the following unadjusted trial balance at the end of their financial year ending December 31, 2016. Smelly s Sales Company Trial Balance as at December 31, 2016 A/C Name DR $ CR $ Cash 800,000 Accounts Receivable 3,000,000 Interest Receivable Merchandise Inventory 1,130,050 Prepaid Insurance 432,000 Furniture and Equipment 1,000,000 Accumulated Depreciation Furniture/Equipment 300,000 Accounts Payable 800,000 Sales Commission Payable Salaries Payable Unearned Sales Revenue 320,000 Ricardo Smelly, Capital 6,300,000 Ricardo Smelly, Withdrawal 315,000 Sales Revenue Earned 9,251,250 Interest Revenue Sales Discount 52,000 Sales Returns and Allowances 122,000 Cost of Goods Sold 5,400,000 Travelling Expense 100,000 Sales Commission Expense 783,000 Salaries Expense 2,470,000 Rent Expense 600,000 Utilities Expense 484,000 Depreciation Expense-Furniture/Equipment Insurance Expense Advertising Expense 188,000 General Expense 95,200 __________ Total 16,971,250 16,971,250 The following additional information was made available at December 31, 2016 a) Interest revenue earned at December 31, 2016 but not yet recorded $143,325. b) Insurance prepaid includes an expired amount of $360,000 relating to the period January to December 31, 2016. c) Furniture and Equipment has an estimated life of six (6) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $100,000. d) Unearned sales revenue still unearned as at December 31, 2016 amounts to $142,200.Salaries expense owing as December 31, 2016 amounts to $255,000 f) Accrued sales commission expense as at December 31, 2016 is estimated as 10% of sales revenue earned. g) Inventory on hand was $840,000 as at December 31, 2016.

Required: 1. Prepare the necessary adjusting journal entries on December 31, 2016 (7 Marks) 2. Smelly s Sales Company multiple-step income statement for the year ended December 31, 2016. (11 Marks) 3. Prepare the companys statement of owners equity for the year ended December 31, 2016 (3 Marks) 4. Prepare the companys classified balance sheet at December 31, 2016 (9 Marks)