Super Rich Business Person (SRBP) is opening a new merchandising company, COMPANY 2. SRBP owns several companies, but COMPANY 1 is very similar to COMPANY 2 (market size and characteristics, product types, expected demand/supply, etc.). Because the two companies are so similar, SRBP is going to use COMPANY 1 as a source of estimated prices and costs for COMPANY 2. COMPANY 1 has been in operation for seven years, and it's most recent Income Statement is presented below. Note that this income statement has been prepared especially for this purpose. SRBP's accountant prepared it to show both cost function AND cost behavior. COMPANY 1 Income Statement For the year ended 20X6 Total Units-2,500) Sales, Gross Sales Discounts Sales Returns & Allowances Sales, Net Cost of Goods Sold (variable) Gross Profit Variable Selling Expenses Variable Administrative Expenses Fixed Selling & Administrative Expenses 43.250 Net Income 275,000 (2,000) (5,500 500 267,500 (165,000) 102,500 (19,250) (13,750) (76.250) 26,250 Now assume that COMPANY 2 has the following transactions in 20X7. Unless specified, assume all sales and purchases are on account (i.e., receivables and payables). Assume the company adopts an expected sale return rate of 2% (again, based on the historic information for COMPANY 1). 1. Issued common stock for 100,000 in buildings and equipment and 75,000 in cash. 2. Purchased inventory on account, 77,470. 3. Paid for freight in with cash (inventory shipping), 6,350. 4. Paid a cash advance for business insurance for the year, 7,500 5. Purchased supplies for cash, 20,000 6. Sold products that cost 49,500 to customers for 82,500. 7. Paid cash for shipping cost of sale, 5,775. 8. Received payment in cash from customer. Discount of 825, cash of 81,675 received. 9. Paid cash of 77,470 for previous on account purchase. 10. Purchased inventory on account, 117,852. 11. Paid for freight in with cash (inventory shipping), 9,660. 12. Sold products that cost 79,200 to customers for 132,000. 13. Paid cash for shipping cost of sale, 9,235 14. Purchased additional supplies for cash, 10,000. 15. Customer returned products costing 924. The sales return amount is 1,540. 16. Paid salaries in cash, 6,250 17. Received payment in cash from customer. Discount of 1,305, cash of 129,155 received. 18. Sold products that cost 52,800 to customers for 57,750. 19. Paid cash for shipping cost of sale, 6,163 20. Paid cash of 117,852 for previous on account purchase. 21. Products costing 1,320 were returned by customers, the sale price for the returned goods is 2,200 22. Received payment in cash from customer. Discount of 578, cash of 57,172 received. 23. Products costing 1,386 were returned by customers, the sale price for the returned goods is 2,310. 24. Purchased inventory on account, 57,950. 25. Paid for freight in with cash (inventory shipping), 4,750. 26. Sold products that cost 46,200 to customers for 77,000. 27. Paid cash for shipping cost of sale, 5,390. 28. Returned damaged inventory, $3,050. 29. Received professional services on account (accounting and legal), 3,250. 30. Paid cash for advertising costs for the year, 5,000. 31. Supplies of $26,250 were used during the year 32. Customer returned products costing 792. The sales return amount is 1,320. 33. Recognized salaries incurred at the end of the year, but not yet paid, 6,250 34. Recognize insurance used for the year, 7,500. 35. Depreciation recognized for buildings and equipment, 15,000. Required: 1) 2) 3) 4) Journalize and post the above transactions. Prepare an Adjusted Trial Balance (adjusting entries are included in the list of transactions above.) Prepare an Income Statement, Statement of Retained Earnings, and Balance Sheet for COMPANY 2. Prepare closing entries