The following information has been given by Put Put Inc. The information covers an accounting period from January 1^st December 31^st of its second year in operation.

Balance Sheet of accounts as of Jan 1^st

Accounts Payable $75,000

Accounts Receivable $125,000

Accumulated Depreciation Display Cases $20,000

Allowance for Uncollectable Accounts $10,000

Cash $850,000

Common Stock $700,000

Merchandise Display Cases $200,000

Inventory (12,000 putters x $50/putter) $600,000

Note Payable (Due in 3 years) $200,000

Retained Earnings $720,000

Wage Payable $50,000

Business Activity, Inventory Purchases --- Jan 1^st Dec 10^th

Feb 1^st

Bought 5,000 putters at $52/putter; payment made in cash

May 1^st

Bought 9,000 putters at $55/putter; payment made in cash

Aug 1^st

Bought 8,000 putters at $58/putter; payment made in cash

Nov 1^st

Bought 4,000 putters at $60/putter; payment made in cash

Other Business Activity, Jan 1^st Dec 10^th

Sold 35,000 putters at $150/putter

Of the above, $2,000,000 were credit sales, the remaining were cash sales

Put Put Inc. Collected $1,950,000 of the credit sales

$15,000 of the Accounts Receivable was written off as bad debt

Operating Expenses - $2,500,000, paid in cash

The Operating Expenses account included interest paid on the Note Payable

The Operating Expenses account does not include any amount for Uncollectible Accounts Expense or Depreciation Expense.

No changes in the following accounts: Accounts Payable, Common Stock, Merchandise Display Cases, Note Payable, Wage Payable

Other Information

Income Tax Rate 30%

Periodic LIFO has been adopted to account for inventories

The Aging Method is used to account for account receivables

Put Put Inc. States that the AFUA account should have a balance of $20,000 after the adjusting journal entry has been made.

Depreciation Method Straight Line, No Residual Value

QUESTION:

Prepare a Multi-Step Income Statement, Statement of Retained Earnings, and Classified Balance Sheet as of December 31st. Remember that the income tax expense calculated in the income statement will also be an "income tax payable" on the balance sheet. This will require an additional adjusting journal entry.