Preparation of journal entries, adjusted trial balance and classified balance sheet.
Mulder Corporation's balance sheet at December 31, 2006, is presented below.
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MULDER CORPORATION Balance Sheet December 31, 2006
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Cash
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$13,100
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Accounts payable
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$8,750
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Accounts receivable
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19,780
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Common Stock
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20,000
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Allowance for doubtful accounts
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(1,000)
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Retained earnings
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12,530
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Merchandise inventory
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9,400
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Total L&SE
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$41,280
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Total Assets
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$41,280
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During January 2007, the following transactions occurred. Mulder uses the perpetual inventory method.
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Jan.
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1
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Mulder accepted a 4-month, 12% note from Alien Company in payment of Alien's $1,000 account.
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3
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Mulder wrote off as uncollectible the accounts of Ex Corporation ($450) and Files Company ($230).
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8
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Mulder purchased $17,200 of inventory on account.
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11
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Mulder sold for $25,000 on account inventory that cost $15,000.
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15
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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%.
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17
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Mulder collected $21,900 from customers on account.
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21
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Mulder paid $16,300 on accounts payable.
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24
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Mulder received payment in full ($230) from Files Company on the account written off on January 3.
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27
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Mulder purchased advertising supplies for $1,400 cash.
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31
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Mulder paid other operating expenses, $4,218.
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Adjustment data:
1. Interest is recorded for the month on the note from January 1.
2. Bad debts are expected to be 6% of the January 31, 2007, accounts receivable.
3. A count of advertising supplies on January 31, 2007, reveals that $560 remains unused.
4. The income tax rate is 30% (Hint: Prepare the income statement up to "Income before taxes" and multiply by 30% to compute the amount.)
Instructions
(You may want to set up T accounts to determine ending balances.)
a) Prepare journal entries for the transactions listed above and adjusting entries. |
b) Prepare an adjusted trial balance at January 31, 2007.
c) Prepare 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.