The problem to be resolved:

Baltic Supplies Unadjusted Trial Balance as at December 31^st, 2018 is as follows:

Account Name Debit Credit

Cash 620,000

Accounts Receivable 410,000

Merchandise Inventory 480,000

Store supplies 144,800

Prepaid Insurance expense 840,000

Building and equipment 2,000,000

Accumulated depreciation-Building and equipment 976,000

Accounts Payable 680,000

Traveling expense payable -

unearned sales revenue 450,000

Note payable-Long term 213,800

Baltic capital 1,700,000

Baltic withdrawal 35,000

Sales revenue earned 2,550,500

sales discount 45,100

Sales returns allowance 62,500

Cost of Goods sold 401,000

Salaries expense 430,000

telephone expense 85,000

Depreciation expense- Building and equipment -

Insurance expense 630,000

store supplies expense 130,000

electricity expense 105,000

Bad debt expense 65,400

Travelling expense 25,000

Interest expense 61,500

The following additional information was made available at December 31, 2018

1. Unearned sales revenue, still NOT earned at December 31, 2018 amounted $65,500.
2. The prepaid insurance of $840,000 was paid on July 1, 2018 for 8-months to February 2019.
3. The Building and Equipment has an estimated life of ten (10) years and is being depreciated on the double declining balance method of depreciation, down to a residual value of $10,000.
4. Accrued travelling expense amounted to $8,800 at December 31, 2018.
5. A physical count of inventory at December 31, 2018, reveals $485,000 worth of inventory on hand.

Required:

1. Prepare the necessary adjusting entries on December 31, 2018.

2. Prepare the companys Multiple-step Income Statement for the year ended December 31, 2018.

3. Prepare the companys Statement of Owners Equity for the year ended December 31, 2018.

4. Prepare the companys classified Balance Sheet at December 31, 2018.