SABRINA CORPORATION

UNADJUSTED TRIAL BALANCE

DECEMBER 31, 2018

ACCOUNTS

DEBIT

CASH

36,868

FV-NI Short Term INVESTMENTS

30,300

ACCOUNTS RECEIVABLE

425,755

ALLOWANCE FOR DOUBTFUL ACCOUNTS

INVENTORY

402,912

NOTES RECEIVABLE

30,000

OFFICE BUILDING

500,000

ACCUMULATED DEPRECIATION (OFFICE BUILDING)

OFFICE EQUIPMENT

120,000

ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT)

ACCOUNTS PAYABLE

DIVIDENDS PAYABLE

NOTES PAYABLE

PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2018

COMMON STOCK, 100,000 ISSUED and OUTSTANDING ON DEC 31, 2018

RETAINED EARNINGS

SALES REVENUE

SALES DISCOUNTS

20,571

SALES RETURNS AND ALLOWANCES

51,259

PURCHASES

2,600,824

PURCHASES DISCOUNTS

TRANSPORTATION - IN

25,235

SALARIES EXPENSE

320,523

RENT EXPENSE

40,955

INSURANCE EXPENSE

16,456

SUPPLIES EXPENSE

25,673

GAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY

ADVERTISING EXPENSE

18,860

OPERATING LOSS ON DISCONTINUED OPERATIONS

21,998

TELEPHONE EXPENSE

28,540

CASH DIVIDENDS DECLARED -Preferred Dividends

29,732

CASH DIVIDENDS DECLARED -Common Dividends

20,000

TOTAL

4,766,461

NOTE: All revenue, expense, gain and loss figures above are before tax.

This company uses a Periodic Inventory system.

ADDITIONAL INFORMATION

1. There was a customer that has gone bankrupt in 2018 and will not pay his $4280 account. This has not been recorded yet.

Also, Sabrina Corp. uses the allowance method to record Bad Debts based on an estimate of 3% of Accounts Receivable.

2. The Office Building is depreciated using the declining balance method at a rate of 4% of net book value per year.

The Office Equipment is depreciated straight line and has a residual value of $8,000 . It was purchased on April 1, 2018

and it is estimated to have a useful life of 5 years.

3. A one year 6% note payable of $60,000 was signed on August 1, 2018.

4. On December 1, 2018, a customer signed a 6% note receivable for $30,000 due in 90 days.

5. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2018. Investments need to

be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.

6. The insurance expense includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2018

AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2018.

7. The company performed a year end physical count of its inventory as at December 31, 2018.

The amount of inventory on hand at December 31, 2018 amounted to $420,700.

Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.

8. It was decided to close down one of the divisions of SABRINA Corporation as it was deemed unprofitable.

(This is for information purposes and to be used in the preparation of the Financial Statements)

9. Assume that the tax rate was 25%. Also, in 2018 common stock was issued as follows:

on April 1: 20,000 common shares were issued and on September 1: 30,000 common shares were issued.

The amount of common stock outstanding at the end of the year (Dec 31, 2018 is 100,000)

1. Prepare the Adjusting Journal Entries required for the 2018 fiscal year at December 31, 2018.

2. Prepare a detailed multi-step income statement for the year ended December 31, 2018.

(including EPS)

Show calculations for EPS.