Required: 1. Prepare any adjusting or correcting journal entries for the above-noted items. Show your work.

2. Prepare the adjusted trial balance. A template is provided in the Excel file.

3. Prepare the following financial statements: a. Statement of Income for the year ending December 31, 2022 b. Statement of Changes in Shareholders' Equity for the year ending December 31, 2022 c. Statement of Financial Position as at December 31, 2022

4. Prepare the closing entries for the year ended December 31, 2022.

5. RPC sales revenue declined by 10% in 2022, compared to 2021, which put pressure on its gross margin, which was 53.50% in 2021. Two of RPC's suppliers have expressed concern about the liquidity of RPC in light of current economic conditions and are concerned about future profitability of RPC. The management of RPC wants to assure the suppliers that the short-term liquidity position is acceptable and that it expects sales revenue to increase by 8% in 2023 and gross margin to be approximately 51.50%. Comment on RPC's liquidity. Using RPC's financial statements that you have competed for 2022, comment on the prospect of higher net income in 2023. How does the format of the income statement help you analyze future profitability?

Red Plaid Company (RPC) is wholesale distributor in British Columbia. RPC has a December 31 yearend. The comnanv is nlanning a maior exnansion next vear that will reauire hank financing. You have 1. RPC purchased a new insurance policy March 1, 2022. The term of the policy was one year. The company's accountant debited insurance expense and credited cash on March 1. No adjustments have been recorded since that date. 2. Occasionally, RPC receives advances from customers for specialized products. At year-end, $12,000 of these products had been delivered to customers. No adjustment was made during the year. The cost of these goods sold was $7,650. 3. When reviewing the invoices received from suppliers and service providers in January 2023, the accountant found an invoice from Acres Maintenance Company for repair work done in November 2022 in the amount of $9,500. The invoice had not been recorded at year end. Repairs and maintenance work are usually recorded as other operating expenses. 4. On September 1, RPC launched a social media marketing campaign. On that date, RPC signed an eight-month contract with Fern Analytics. Fern Analytics agreed to organize and run the marketing campaign. The total cost of the contract was $48,000, payable in two amounts. The first payment of $30,000 was due on January 9,2023 , and the balance was due at the end of the contract. The campaign started on October 1, 2022 and continued through the end of the year and into 2023. RPC was very pleased with the initial results of the marketing campaign. 5. The note payable arose from the purchase of long-term assets. The note is due on June 30, 2024. Interest is paid annually on June 30th. The annual rate of interest is 6%. 6. No depreciation expense has been recorded for the year. Both the office equipment and the truck are depreciated using the straight-line depreciation method. The useful life of the office equipment is 8 years, and no residual value is expected. The useful life of the trucks is 5 years, and the company expects to sell the trucks at that time for $22,000. 7. The Board of Directors of RPC declared a dividend of $42,000 on December 31,2022 . The dividend will be paid on January 31, 2023. 8. RPC issued shares during the year with a value of $50,000. The journal entry was correctly recorded as a debit to cash and a credit to common shares for $50,000. Red Plaid Company (RPC) is wholesale distributor in British Columbia. RPC has a December 31 yearend. The comnanv is nlanning a maior exnansion next vear that will reauire hank financing. You have 1. RPC purchased a new insurance policy March 1, 2022. The term of the policy was one year. The company's accountant debited insurance expense and credited cash on March 1. No adjustments have been recorded since that date. 2. Occasionally, RPC receives advances from customers for specialized products. At year-end, $12,000 of these products had been delivered to customers. No adjustment was made during the year. The cost of these goods sold was $7,650. 3. When reviewing the invoices received from suppliers and service providers in January 2023, the accountant found an invoice from Acres Maintenance Company for repair work done in November 2022 in the amount of $9,500. The invoice had not been recorded at year end. Repairs and maintenance work are usually recorded as other operating expenses. 4. On September 1, RPC launched a social media marketing campaign. On that date, RPC signed an eight-month contract with Fern Analytics. Fern Analytics agreed to organize and run the marketing campaign. The total cost of the contract was $48,000, payable in two amounts. The first payment of $30,000 was due on January 9,2023 , and the balance was due at the end of the contract. The campaign started on October 1, 2022 and continued through the end of the year and into 2023. RPC was very pleased with the initial results of the marketing campaign. 5. The note payable arose from the purchase of long-term assets. The note is due on June 30, 2024. Interest is paid annually on June 30th. The annual rate of interest is 6%. 6. No depreciation expense has been recorded for the year. Both the office equipment and the truck are depreciated using the straight-line depreciation method. The useful life of the office equipment is 8 years, and no residual value is expected. The useful life of the trucks is 5 years, and the company expects to sell the trucks at that time for $22,000. 7. The Board of Directors of RPC declared a dividend of $42,000 on December 31,2022 . The dividend will be paid on January 31, 2023. 8. RPC issued shares during the year with a value of $50,000. The journal entry was correctly recorded as a debit to cash and a credit to common shares for $50,000