The post$-$closing trial balance of the Pat Callahan Company at December $31,2019$ is shown below. $($ see image$)$

The following transactions took place during $2020.$

Issue $10,000$ shares of common stock for $$30,000.$

Collected: Accounts Receivable, $$25,000$; Interest on Bonds $$5,000$; Cash Sales,

$$1000,000($Cost of Goods Sold $$40,000).$

Paid: Accounts Payable, $$15,000$; Notes Payable, $$21,000$; Income Taxes Payable,

$$5,000$; Operating Expenses, $$37,000.$

Purchased inventory, $$32,000,$ of which $$16,000$ was purchased on account. $($Assume

perpetual inventory.$)$

Made sales on account, $$85,000($Cost of Goods Sold $$16,000).$

On June $30,2020,$ purchased a second delivery truck for $$15,000,$ paying cash. The

truck has useful life of $10$ years and a salvage value of $$3,000.$

$*$Ending Inventory $(12/31/20)$ $$26,000.$

Instructions

a$.$ Journalize each of the transactions above of the Pat Callahan Company. Some items

require more than one journal entry.

b$.$ Post the entries to appropriate accounts. $($You should set up a T$-$account for each

account noted on the trial balance.$)$

c$.$ Prepare a trial balance after posting the journal entries and enter the amounts on a

$10-$column work sheet like the one shown in the text. Enter all the accounts shown on

the original trial balance.

d$.$ Enter the following adjustments on the work sheet: $($a$)$ Accrued wages at year end

total $$700$; $($b$)$ Bad debt expense is estimated at $1\%$ of credit sales; $($c$)$ Record

straight$-$line depreciation on the building and trucks; $($d$)$ Accrued interest on the

investments in bonds is $$1,500$; $($e$)$ Income tax expense for $2020$ is $$21,065.$ The tax

is not due until $2021.$

e$.$ Prepared the Adjusted Trial Balance.

f$.$ Complete the income statement and balance sheet columns of the work sheet.

g$.$ Prepare closing journal entries and Post$-$closing Trial Balance.