Question

The following account balances were taken from the ledger of ABC Company at December 31, 2019...

The following account balances were taken from the ledger of ABC Company at December 31, 2019 before adjustments:

Cash $ 42,000

Accounts Receivable 86.000

Allowance for Doubtful Accounts 2,400

Inventory 97,000

Land 62,300

Buildings 142,500

Accumulated Depreciation---Buildings 32,560

Long Term Investments 31,500

Accounts Payable 51,800

Mortgage Payable 122,500

Capital Stock, $5 par 200,000

Retained Earnings, December 31, 2017 26,950

Dividends 40,540

Sales 431,000

Sales Returns 9,560

Sales Discounts 8,440

Cost of Goods Sold 203,420

Selling Expenses 58,300

Administrative Expenses 44,200

Supplies Expense 5,100

Insurance Expense 12,000

Taxes---Property & Payroll 15,800 Interest Revenue 750

Interest Expense 9,300

Information relating to adjustments on December 31, 2018, follows:

  1. Allowance for Doubtful Accounts should be increased by $2,200.

  2. Buildings have a salvage value of $7,500. Buildings are being depreciated at the rate of 10% per year.

  3. Accrued selling expenses are $9,300.

  4. Supplies on hand at year-end are $850.

  5. Prepaid insurance relating to 2018 totals $3,800 (this is the amount of unexpired insurance at year-end).

  6. Interest revenue earned in 2018 totals to $1,900.

  7. Accrued property and payroll taxes for the year equal $3,550.

  8. Accrued interest on the mortgage is $1,980.

  9. Income tax is estimated to be 40% of income.


REQUIRED:

Prepare an adjusting entry page with all the necessary entries.

Prepare a 10-column worksheet.

Prepare an Income Statement, Statement of Retained Earnings, and a classified Balance Sheet. No common stock was issued.

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