Using a trial balance and T-accounts, prepare an income statement for the month of July 2012, and prepare a balance sheet dated 31 July 2012. Cross-reference entries in the T-accounts using the numbers of the transactions shown above.

2-1 JanMar Fabrics: Preparing the Balance Sheet and Income Statement*

The adjusted, postclosing trial balance of JanMar Fabrics on 30 June 2012 appears on the next page.

JanMar Fabrics adjusted, postclosing trial balance June 30, 2012

The firm made the following transactions during July:

1. Sold merchandise on account for a total selling price of $425,000.

2. Purchased merchandise inventory on account from various suppliers for $231,500.

3. Paid rent for the month of July of $58,750. 4. Paid salaries to employees during July of $103,000. 5. Collected accounts receivable of $170,750. 6. Paid accounts payable of $194,750. 7. Paid miscellaneous expenses of $16,000.

Adjusting entries required at the end of July relate to the following:

8. The company paid the premium on a one-year insur- ance policy on 1 March 2012, with coverage beginning on that date. This is the only insurance policy in force on 30 June 2012.

9. The firm depreciates its equipment over a 10-year life. The equipment is not expected to have any residual value.

10. Employees earned salaries of $8,000 during the last three days of July but were not paid. These are the only unpaid salaries at the end of July.

11. The note payable is a 90-day, 12% note issued on 30 June 2012.

12. Merchandise inventory on hand on 31 July 2012 was $389,750.

Interest expense 129,320 5,738 98,662 Income taxes Other noncurrent assets Accounts payable Advances from customers Other current liabilities Long-term debt Other noncurrent liabilities Common shares Retained earnings 327,422 208,920 24,866 169,522 70,610 84,124 264,428 155,872 23,180 181,878 60,802 73,366 708,680 426,510 Required 889,054 541,088 a. Prepare an income statement for PetroLim for the year ending 31 December 2018. b. Prepare statements of financial position for PetroLim as of 31 December 2017 and 31 December 2018. Case Study 2-1 JanMar Fabrics: Preparing the Balance Sheet and Income Statement The adjusted, postclosing trial balance of JanMar Fabrics on 30. June 2012 appears on the next page. JanMar Fabrics adjusted, postelosing trial balance June 30, 2012 The firm made the following transactions during July: 1. Sold merchandise on account for a total selling price of $425,000 2. Purchased merchandise inventory on account from various suppliers for $231,500. 3. Paid rent for the month of July of $58,750. 4. Paid salaries to employees during July of $103,000. 5. Collected accounts receivable of $170,750. 6. Paid accounts payable of $194,750. 7. Paid miscellaneous expenses of $16,000. $221,000 136,250 340,750 2,000 1,050,000 Cash Accounts Receivable andise Inventory Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Notes Payable Salaries Payable Common Stock Retained Earnings $420,000 165,500 25,000 Adjusting entries required at the end of July relate to the following: 8. The company paid the premium on a one-year insur- ance policy on 1 March 2012, with coverage beginning on that date. This is the only insurance policy in force on 30 June 2012 9. The firm depreciates its equipment over a 10-year life. The equipment is not expected to have any residual value. 6,250 750,000 383,250 $1,750,000 $1,750,000 Note that this case assumes that students are familiar with the double-entry system of accounting, the subject of this chapter's appendix (Continued PAGE