The following is the preclosing trial balance of Ralph Retailers, Inc.:
Preclosing Trial Balance as of December 31, 2014

The following additional information is provided:
a. The company paid a salary advance of $5,000 to one of its employees, a total that was debited to the Salaries expense account. This was an advance against the employee€™s salary for the year 2015.
b. On January 1, 2014, the company paid an insurance premium of $15,000, which was debited to the Insurance expense account. The premium provided insurance coverage for 18 months beginning on January 1, 2014.
c. The company decided to revise its estimate of bad debts expense by calculating it at 5% of its sales revenue.
d. On January 1, 2015, the company€™s board of directors declared an additional dividend of $20,000 for the year 2014.

Required:
1. Prepare the necessary adjusting entries for the year ended December 31, 2014.
2. Prepare an income statement for the year ended December 31, 2014.
3. Prepare a balance sheet as of December 31,2014.

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DR CR $38,700 71,600 12,000 125,000 50,000 125,000 Cash Accounts receivable Prepaid rent Inventory Equipment Building Allowance for doubtful accounts Accumulated depreciation equipment Accumulated depreciation building Advance from customers Accounts pavable Salaries payable Capital stock Retained earnings 1/1/14 Sales revenue Cost of goods sold Salaries expense Bad debt expense Rent expense Insurance expense Depreciation expense building Depreciation expense equipment Dividends S 3,000 40,000 12,000 18,000 26,000 5,500 70,000 264,850 425,000 275,250 60,000 18,300 40,000 15,000 6,000 3,000 23,500 $864,350 Totals S864,350