1. The entity for this assignment is Superior Painting Company.

Superior prepares adjusting journal entries yearly. The information for your adjusting entries (prepare adjusting entries on the worksheet only):

a) The prepaid insurance balance represents a one-year policy purchased on September 1, 2023. The policy covers the period from September 1, 2023, through August 31, 2024.

b) The $11,000 balance in the advertising expense account represents $5,000 in advertising for 2023 and a $6,000 prepayment for advertising in 2024.

c) The equipment was purchased in 2022 for $260,000 and is being depreciated using the straight-line method over a five-year useful life. The estimated salvage value is $10,000.

d) At year-end, wages of $8,000 should be accrued.

e) The company borrowed $500,000 on October 1, 2023. The principal and interest will be repaid on March 31, 2024. The interest rate on this note payable is 6%. (Round to the nearest dollar).

f) The unearned revenue account represents $60,000 in advance payments. As of December 31, 2023, 20% of this amount has not yet been earned.

g) Superior has not yet accrued a $3,000 utility (electric) bill for December of 2023.

2. Use the adjusted trial balance you completed in part 1 and prepare the following financial statements:

a) A 2023 income statement. Assume no income tax expense for the year.

b) A 2023 statement of shareholders equity. The beginning of the year balance in retained earnings was $50,000 and the $45,000 balance on the unadjusted trial balance includes a reduction to the beginning of the year balance for a $5,000 dividend payment. No common stock was issued during the year. A sample statement is provided on page 74 of your textbook.

c) A December 31, 2023, balance sheet. The retained earnings balance on both the unadjusted trial balance and adjusted trial balance is the balance before closing. Thus, you need to complete part 2(b) to arrive at the ending balance in retained earnings (which is included on the balance sheet). All liabilities are current liabilities. A sample balance sheet is provided on page 72 of your textbook.

3. Prepare, in good form, 2023 closing journal entries for Superior. Do not close dividends to retained earnings because retained earnings were reduced during the year when dividends were declared and paid.