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problem: McMinn Retail, Company, is a retailer that has engaged you to assist in creation on its financial statements at December 31, 2007. Following are correct adjusted account balances, in alphabetical order, as of that date. Each balance is the "normal" balance for that account. [Suggestion: The "normal" balance is same as the debit or credit side that increases the account.]

Accounts payable ....................................................................................

$12,750

Accounts receivable ..............................................................................

2,600

Accumulated depreciation; office equipment ......................................

12,000

Additional paid-in capital (common stock) ..............................................

7,000

Bonds payable (due December 31, 2012) .................................................

22,500

Cash ...........................................................................................................

15,200

Common stock (1,800 shares, $10 par value) .........................................

18,000

Cost of goods sold ......................................................................................

100,575

Deferred income taxes ...............................................................................

5,750

Depreciation expense; office equipment ............................................

2,750

Dividends declared ......................................................................................

5,000

Income tax expense ......................................................................................

8,190

Insurance expense ....................................................................................

900

Land ............................................................................................................

37,500

Merchandise inventory .........................................................................

17,500

Notes payable (due December 31, 2008) ..............................................

2,500

Office equipment ..............................................................................................

41,000

Office supplies .........................................................................................

900

Office supplies expense ...........................................................................

520

Preferred stock (250 shares, $20 par value) ..........................................

6,000

Premium on bonds payable ....................................................................................

1,750

Prepaid rent ...........................................................................................

1,800

Rent expense .......................................................................................

6,100

Retained earnings (January 2007) .............................................................

21,050

Salaries expense .....................................................................................

68,095

Sales .....................................................................................................

226,000

Sales returns and allowances ................................................................

2,500

Sales taxes payable ........................................................................................

8,200

Treasury stock (200 common shares at cost) ................................................

2,250

Utilities expense ................................................................................

4,120

Instructions
[A] Create an income statement for the year ended December 31, 2007, which includes amounts for gross profit, income before income taxes, & net income. List expenses [other than cost of goods sold and income tax expense] in order, from largest to smallest dollar ($). You may ignore earnings / share.

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  • Reference No.:- M922641

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