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problem: Mulder Corporation's balance sheet at December 31, 2006, is given below.

MULDER CORPORATION Balance Sheet December 31, 2006



Accounts payable


Accounts receivable


Common Stock


Allowance for doubtful accounts


Retained earnings


Merchandise inventory


Total L&SE


Total Assets




During January 2007, the following transactions occurred. Mulder uses the perpetual inventory method.



 Mulder accepted a 4-month, 12% note from Alien Company in payment of Alien's $1,000 account.



Mulder wrote off as uncollectible the accounts of Ex Corporation ($450) and Files Company ($230).



 Mulder purchased $17,200 of inventory on account.



 Mulder sold for $25,000 on account inventory that cost $15,000.



Mulder sold inventory that cost $ 600 to Ben Borke for $1,000. Borke charged this amount on his Visa First Bank card. The services fee charged Mulder by First Bank is 3%.



 Mulder collected $21,900 from customers on account.



 Mulder paid $16,300 on accounts payable.



 Mulder received payment in full ($230) from Files Company on the account written off on January 3.



 Mulder purchased advertising supplies for $1,400 cash.



 Mulder paid other operating expenses, $4,218.

Adjustment information:

[A] Interest is recorded for the month on the note from January 1.
[B] Bad debts are expected to be 6 percent of the January 31, 2007, accounts receivable.
[C] A count of advertising supplies on January 31, 2007, reveals that $560 remains unused.
[D] The income tax rate is 30 percent (Suggestion: Make income statement up to "Income before taxes" and multiply by 30% to compute the amount.)

[You may want to set up T accounts to estimate ending balances.] 
[A] Make journal entries for the transactions listed above and adjusting entries.
[B] Make an adjusted trial balance at January 31, 2007. 
[C] Make an income statement and a retained earnings statement for the month ending January 31, 2007, and a classified balance sheet as of January 31, 2007.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922631

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