The following is the preadjusted trial balance of Ralph Retailers, Inc., as of December $31,2022.$

Preadjusted Trial Balance as of December $31,2022$

DR CR

Cash $$38,700$

Accounts receivable $71,600$

Prepaid rent $12,000$

Inventory $125,000$

Equipment $50,000$

Building $125,000$

Allowance for doubcul accounts $$3,000$

Accumulated depreciaEon$-$equipment $40,000$

Accumulated depreciaEon$-$building $12,000$

Advance from customers $18,000$

Accounts payable $26,000$

Salaries payable $5,500$

Common Stock $70,000$

Retained earnings, $1/1/2022264,850$

Sales revenue $425,000$

Cost of goods sold $276,250$

Salaries expense $60,000$

Bad debt expense $18,300$

Rent expense $40,000$

Insurance expense $15,000$

DepreciaEon expense$-$equipment $3,000$

DepreciaEon expense$-$building $6,000$

Dividends $23,500$

Totals $$864,350$ $$864,350$

The following addiEonal informaEon is provided:

a$.$ The company paid a salary advance of $$5,000$ to one of its employees, a total that was

debited to the Salaries expense account. This was an advance against the employee$$s salary

for the year $2023.$

b$.$ On January $2,2022,$ the company paid an insurance premium of $$15,000,$ which was debited

to the Insurance expense account. The premium provided insurance coverage for $18$

months beginning on January $2022.$

c$.$ The company decided to revise its esEmate of bad debt expense by calculaEng it at $5\%$ of its

sales revenue.

d$.$ On December $31,2022,$ the company$$s board of directors declared a dividend of $$20,000,$

payable in January $2023.$ No journal entry was recorded.

$5$

Required:

$1.$ Prepare the necessary adjusEng entries for the year ended December $31,2022.$

$2.$ Prepare an adjusted trial balance as of December $31,2022.$

$3.$ Prepare an income statement for the year ended December $31,2022.$ Ignore income taxes.

Solu$3$on:

Requirement $1$ Adjus$3$ng Journal Entries for the year ended December $31,2022.$

Account Debit Credit

Account Debit Credit