The Neon Lumber Company uses the periodic inventory method, and it has a policy of adjusting and closing its books only at year end. The following adjusted trial balance for the company was prepared after posting the normal adjusting entries on December 31, 2020:

Account Title Debit Credit

Cash 66,240

Accounts Receivable 140,500

Merchandise Inventory, January 1, 2020 289,620

Supplies on Hand 5,200

Prepaid Insurance 4,800

Prepaid Rent 56,000

Equipment 92,000

Accumulated Depreciation 16,460

Accounts Payable 96,800

Capital Stock 50,000

Retained Earnings, January 1, 2020

456,210

Dividends 4,000

Sales 910,120

Sales Discounts 4,220

Sales Returns and Allowances 6,530

Interest Revenue 820

Purchases 624,440

Purchase Discounts 4,650

Purchase Returns and Allowances 2,400

Transportation In 9,420

Advertising Expense 36,840

Sales Salaries Expense 120,550

Administrative Salaries Expense 60,300

Utilities Expense 9,560

Delivery Expenses (Freight Out) 2,610

Legal and Accounting Expense 3,200

Interest Expense 400

Miscellaneous Administrative Expense 1,030

Totals 1,537,460 1,537,460

The ending inventory balance at Dec. 31, 2020 was $280,000.

Required:

A. Following the example on page 242 of the textbook, prepare the income statement for the year ended December 31, 2020. Do your best to distinguish between selling expenses and administrative expenses. Both interest revenue and interest expense, of course, are non-operating items.

B. prepare the statement of retained earnings for the year ended December. 31, 2020.

C. prepare the balance sheet as of December. 31, 2020.

D. Prepare the closing entries as of December 31, 2020.

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Chapter 6 Homework #2 Name: Please add, delete, or move columns, rows, or numbers as necessary Please make sure all numbers are formatted with appropriate commas Neon Lumber Company Income Statement For the Year Ending December 31, 2020 910,120 Operating Revenue Sales Sales Discounts Sales Returns and Allowances Net Sales 289,620 Cost of goods sold: Merchandise Inventory, Jan. 1, 2020 Purchases Purchase Discounts Purchase Returns & Allownees Net Purchases Transportation in Net Cost of Purchases Goods Available for Sale Merchandise Inventory, Dec. 31, 2020 Cost of Goods Sold Gross Margin Operating Expenses: Selling Expenses: Sales Salaries Expense Advertising Expense Utilities Expense Delivery Expense Administrative Expenses: Administrative Salaries Expense Legal and Accounting Expense Misc Administrative Expense Total Operating Expenses Income from Operations Non-Operating Items: Interest Revenue Interest Expense 120.550 820 Net Income B Neon Lumber Company Statement of Retained Earnings For the Year Ending December 31, 2020 Retained earnings, Jan. 1, 2020 Net income for the year Dividends Retained ernings, Dec 31, 2020 c Neon Lumber Company Balance Sheet As of December 31, 2020 66.240 Cash Accounts Receivable Merchandise Inventory Supplies of Hand Prepaid Insurance Prepaid Ron Equipment Accumulated Depreciation Total Assets Liabilities: Accounts Payable Stockholders equity Capital Stock Retained Eaming Total Stockholders' equity 11 Total Liabilities & Stockholders' Equity D Debit Credit Closing Entries Accounts Sales Merchandise Inventory. Dec. 31 Interest Revenue Purchase Discounts Purchase Returns & Allowances Income Summary Income Summary Merchandise Inventory, Jan. 1 Sales Discounts Sales Returns and Allowances Purchases Transportation in Advertising Expense Sales Salaries Expense Administrative Salaries Expense Unities Expense Delivery Expense Legal and Accounting Expense Interest Expense Mise Admin Expense Income Summary Retained Earnings Retained Earings Dividends