Baimer and Associates has operated for one year. Its unadjusted trial balance follows. (Appendix 5A: Unadjusted Trial Balance Complete a work sheet) Account Debit Credit Cash 4,200 Accounts Receivable 14,800 Rent Receivable 0 Inventory 19,000 Prepaid Insurance 1,200 Office Equipment 42,500 Accumulated Depreciation 0 Accounts Payable 8,500 Wages Payable 0 Bonds Payable 25,000 Common Stock 35,000 Retained Earnings 0 Sales 30,600 Rent Revenue 1,100 Cost of Goods Sold 11,000 Wage Expense 7,500 Depreciation Expense 0 Insurance Expense 0 Income Summary 100,200 100,200 The following adjusting journal entries were recorded on December 31, 1997. Journal entry explanations have been omitted. 1. Rent Receivable 600 3. Wage Expense 1,200 Rent Revenue 600 Wages Payable 1,200 2. Insurance Expense 400 4. Depreciation Expense 2,000 Prepaid Insurance 400 Accum. Depr. 2,000 REQUIRED:

a. Create a work sheet, and transfer the adjusting journal entries to the work sheet.

b. Complete the work sheet and prepare the income statement, statement of retained earnings, balance sheet, and a statement of cash flows using the indirect approach. E5-21 (Appendix 5B: Taccount analysis)