The Fiorillo Company has the following account balances on December 31, 2010 prior to any adjustments:
Debit Credit
Cash $ 1,900
Accounts receivable 4,700
Allowance for doubtful accounts $ 60
Inventory 8,700
Prepaid insurance 600
Land 4,100
Buildings 38,000
Accumulated depreciation:
buildings 11,500
Equipment 10,700
Debit Credit
Accumulated depreciation:
equipment 3,100
Accounts payable 4,300
Notes payable (due March 1, 2011) 1,400
Unearned rent 1,200
Mortgage payable (due
January 1, 2015) 7,300
Capital stock (2,000 shares) 10,000
Retained earnings (January 1, 2010) 18,075
Dividends distributed 1,300
Sales revenue 49,355
Cost of goods sold 27,185
Salaries expense 4,080
Utilities expense 2,000
Office supplies expense 770
Delivery expense 1,275
Other expenses 980
Additional adjustment information: (a) depreciation on buildings, $1,100; on equipment, $600; (b) bad debts expense, $240;
(c) interest accumulated but not paid: on note payable, $50; on mortgage payable, $530 (this interest is due during the next
accounting period); (d) insurance expired, $175; (e) salaries accrued but not paid $370; (f) rent that was collected in advance
and is now earned at year-end, $800; (g) office supplies on hand at year-end, $230 (expensed when originally purchased earlier
in the year); and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2011.
Required
1. Transfer the account balances to a 10-column worksheet and prepare a trial balance.
2. Complete the worksheet.
3. Prepare the company's income statement, retained earnings statement, and balance sheet.
4. Prepare (a) adjusting and (b) closing entries in the general journal.