Sunland Company's balance sheet at December 31, 2021, is presented below. Sunland Company Balance Sheet December 31, 2021 Accounts payable $13,010 $8,310 Cash 20,600 Common stock 18,500 Accounts receivable Retained earnings (850) 15,710 Allowance for doubtful accounts 9,760 Inventory $42,520 $42,520 During January 2022, the following transactions occurred. Sunland uses the perpetual inventory method. Sunland accepted a 4-month, 8% note from Betheny Company in payment of Betheny's $1,200 account. Jan. 1 Sunland wrote off as uncollectible the accounts of Walter Corporation ($500) and Drake Company ($300) 3 Sunland purchased $15,700 of inventory on account. 8 Sunland sold for $23,400 on account inventory that cost $16,110. 11 Sunland sold inventory that cost $750 to Jack Rice for $900. Rice charged this amount on his Visa First Bank card. The service fee charged Sunland by First Bank is 3%. 15 Sunland collected $24,700 from customers on account. 17 21 Sunland paid $15,620 on accounts payable Sunland received payment in full ($300) from Drake Company on the account written off on January 3. 24 Sunland purchased advertising supplies for $1,420 cash. 27 Sunland paid other operating expenses, $3,390. 31 Adjustment data: Interest is recorded for the month on the note from January 1 1. 2. Bad debts are expected to be 6% of the January 31, 2022, accounts receivable. A count of advertising supplies on January 31, 2022, reveals that $530 remains unused. 3. The income tax rate is 30%. (Hint: Prepare the income statement up to Income before taxes and multiply by 30% to compute the amount; round to whole dollars.) 4. (You may want to set up T-accounts to determine ending balances.) Prepare journal entries for the transactions listed above and adjusting entries. (Include entries for cost of goods sold using the perpetual inventory system.) (Round answers to 0 decimal places, e.g. 1,250. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Account Titles and Explanation Date Debit Credit (To record sales revenues.) (To record cost of goods sold.) (To record sales revenues and service charges.) (To record sales revenues and service charges.) (To record cost of goods sold.) (To reverse allowance for doubtful debts.) (To record cash received from Drake Company.) (1) (To record cash received from Drake Company.) (1) (2) (3) (4) SUNLAND COMPANY Adjusted Trial Balance Debit Credit $ $ Totals Prepare an income statement for the month ending January 31, 2022. (Round answers to 0 decimal places, e.g. 1,250.) SUNLAND COMPANY Income Statement +A Prepare a retalned earnings statement Tor the monthnending January 31, 2022. (Round answers to O decimal places, e.g. 1,250. SUNLAND COMPANY Retained Earnings Statement eTextbook and Media List of Accounts Prepare a classified balance sheet as of January 31, 2022. (List Current Assets in order of liquidity. Round answers to O decimal places, e.g. 1,250.) SUNLAND COMPANY Balance Sheet Assets $ $ Liabilities and Stockholders' Equity Liabilities and Stockholders' Equity $ $ e Textbook and Media List of Accounts
