The Candy Shop, owned by Muskandeep, sells candy and ice cream all year long. The shop has an August $31$ fiscal year end and uses a perpetual inventory system and the earnings approach. On August $31,2024,$ the company had the following trial balance:

THE CANDY SHOP

Trial Balance

August $31,2024$

Debit Credit

Cash $.............................................................$ $ $7,627$

Accounts Receivable $...........................18,000$

Allowance for Doubtful Accounts $............2,000$

Merchandise inventory $..............................61,108$

Supplies $.......................................................4,095$

Equipment $...................................................70,800$

Accumulated depreciation$$equipment $..$ $ $13,275$

Accounts payable $.......................................18,745$

Unearned revenue $......................................5,205$

Notes payable $.............................................42,000$

$,$ capital $.................58,400$

$,$ drawings $............57,600$

Sales $............................................................513,510$

Sales returns and allowances $...................12,595$

Sales discounts $..........................................300$

Rent revenue $...............................................1,200$

Cost of goods sold $.....................................317,945$

Salaries expense $........................................74,400$

Rent expense $..............................................19,800$

Insurance expense $.....................................4,140$

Interest expense $.........................................1,925\_\_\_\_\_\_\_$

Totals $......................................................$ $$652,335$ $$652,335$

Information

a$)$ A count of supplies on August $31$ shows $ $643$ on hand.

b$)$ The equipment has an estimated $3-$year useful life and a $$5,000$ residual value. Remember that adjusting entries are done annually, not monthly. The entity uses the straight$-$line method of depreciation.

c$)$ Interest for the year on the note payable is $3\%$ and it is paid monthly.

d$)$ Of the notes payable, $$6,000$ must be paid on September $1$ each year.

e$)$ An analysis of the Unearned Revenue account shows that $$3,643$ has been earned by August $31.$ A corresponding entry of $$2,643$ for Cost of Goods Sold will also need to be recorded for these sales.

f$)$ Signed a contract to receive delivery of a new display case for $$1,500$ November $1.$

g$)$ A count of the merchandise inventory on August $31$ shows $$60,643$ of inventory on hand.

h$)$ Management uses the percent of receivable method to record the bad debt expense. They estimate that $10\%$ of the Accounts Receivable is not collectable.

$1.$ Record and post the adjustments required at August $31,2024,$ and update the account balances as required. Add any general ledger accounts needed.

$2.$ Prepare an adjusted trial balance at August $31,2024.$

$3.$ Prepare a multiple$-$step income statement, statement of owner$$s equity, and classified balance sheet in good form. You made no capital contributions in the year.