Requirements:

a. Copy the trial balance above in the first two columns of a 10-column work sheet.

b. Prepare adjusting journal entries in journal form from the following information (the fiscal year ends December 31).

1. Estimated bad debts, .5% of sales less returns and allowances.

2. Depreciation on building 4% per year; on furniture and fixtures, 10% per year.

3. Insurance expired during the year, $3,900.

4. Interest at 12% is payable on the mortgage on January 1 of each year

5. Sales salaries accrued, December 31, $4,000.

6. Advertising expense paid in advance, $740.

7. Office supplies on hand December 31, $1,600 (charged to Miscellaneous Office Expenses when purchased).

8. Interest accrued on notes payable, December 31, $1,500.

c. Transfer the adjusting entries to the work sheet and complete it.

d. Prepare an income statement, a balance sheet, and a statement of retained earnings.

e. Prepare closing journal entries.

f. Indicate the adjusting entries that would be reversed.

	Debit	Credit
Cash	13,600
Accounts Receivable	64,800
Allowance for Doubtful Accounts		2,000
Inventory	76,000
Office Supplies
Land	40,000
Building	90,000
Accumulated Depreciation of Building		14,400
Furniture and Fixtures	22,000
Accumulated Depreciation of Furniture and Fixtures		6,600
Prepaid Insurance	7,800
Prepaid Advertising
Accounts Payable		34,200
Salaries Payable
Interest Payable
Notes Payable		30,000
Mortgage Payable		40,000
Common Stock		60,000
Retained Earnings		64,730
Sales		720,000
Sales Returns and Allowances	2,800
Sales Discounts	5,900
Cost of Goods Sold	533,700
Sales Salaries Expense	54,000
Advertising Expense	9,400
Salaries Expense, Office and General	31,000
Heat, Light, and Water Expense	15,100
Telephone Expense	1,700
Miscellaneous Office Expenses	2,000
Bad Debt Expense
Depreciation Expense
Insurance Expense
Interest Expense	2,130
Subtotal
Net Income
Totals	971,930	971,930