The following trial balance was taken from the books of AIS UnlimitedCorporation on December 31, 2015.

Account Debit Credit

Cash $ 12,000

Accounts Receivable 40,000

Note Receivable 7,000

Allowance for Doubtful Accounts $ 1,800

Merchandise Inventory 54,000

Prepaid Insurance 4,000

Furniture and Equipment 130,000

Accumulated Depreciation of F. & E. 15,000

Accounts Payable 10,800

Common Stock 44,000

Retained Earnings ?

Sales 310,000

Cost of Goods Sold 131,000

Salaries Expense 50,000

Rent Expense 12,000

Totals $440,000 $440,000

At year end, the following items have not yet been recorded.

a. Insurance expired during the year, $3,000.

b. Estimated bad debts, 2% of gross sales.

c. Depreciation on furniture and equipment, 10% per year.

d. Interest at 8% is receivable on the note for one full year.

e. Accrued salaries at December 31, $6,000.

INSTRUCTIONS

A. Prepare the necessary adjusting entries.

B. Prepare a single step income statement, a statement of retained earnings, and a balance sheet in good form.

C. Prepare a multi-step income statement (30% of the expenses are selling and 70% are administrative).

D. Prepare the necessary closing entries.