The following balances were taken from the general ledger of Benson Company on January 1, 2000

\begin{tabular}{|c|c|c|}

\hline & Debits & Credits \\

\hline . . . . . . . . . . & $\$ 13,500$ & \\

\hline Short-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 10,000 & \\

\hline Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 12,500 & \\

\hline Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 15,000 & \\

\hline Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & 25,000 & \\

\hline . . . . . . . . . . . & 75,000 & \\

\hline . . . . . . . . . . . & 20,000 & \\

\hline Notes Payable. . & & $\$ 17,500$ \\

\hline Accounts Payable . & & 12,500 \\

\hline Salaries and Wages Payable . . . . & & 2,500 \\

\hline Mortgage Payable. . . . . . . . . . . . . & & 37,500 \\

\hline Capital Stock ( 7,000 shares outstanding) . & & 70,000 \\

\hline Retained Earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . & & 31,000 \\

\hline

\end{tabular}

During 2000, the company completed the following transactions:

a. Purchased inventory for $\$ 110,000$ on credit.

b. Issued an additional $\$ 25,000$ of capital stock ( 2,500 shares) for cash.

c. Paid property taxes of $\$ 4,500$ for the year 2000 .

d. Paid advertising and other selling expenses of $\$ 8,000$.

e. Paid utilities expenses of $\$ 6,500$ for 2000 .

f. Paid the salaries and wages owed for 1999. Paid additional salaries and wages of $\$ 18,000$ during 2000 .

g. Sold merchandise costing $\$ 105,000$ for $\$ 175,000$. Of total sales, $\$ 45,000$ were cash sales and $\$ 130,000$ were credit sales.

h. Paid off notes of $\$ 17,500$ plus interest of $\$ 1,600$

i. On November 1,2000 , received a loan of $\$ 10,000$ from the bank.

Adjusting Entries Required:
Account Classifications and Debit-Credit Relationships j. On December 30, 2000, made annual mortgage payment of $\$ 2,500$ and paid interest of $\$ 3,700$.
k. Collected receivables for the year of $\$ 140,000$.
1. Paid off accounts payable of $\$ 112,500$.
m. Received dividends and interest of $\$ 1,400$ on short-term investments during 2000. (Record as Miscellaneous Revenue.)
n. Purchased additional short-term investments of $\$ 15,000$ during 2000. (Note: Short-term investments are current assets.)
o. Paid 2000 corporate income taxes of $\$ 11,600$.
p. Paid cash dividends of $\$ 7,600$.
1. Journalize the 2000 transactions. (Omit explanations.)
2. Set up T-accounts with the proper account balances at January 1, 2000, and post the journal entries to the T-accounts.
3. Determine the account balances, and prepare a trial balance at December 31, 2000 .
4. Prepare an income statement and a balance sheet. (Remember that the dividends account and all revenue and expense accounts are temporary retained earnings accounts.)
5. Interpretive Question: Why are revenue and expense accounts used at all?