Financial Statements The Stern Company uses a perpetual inventory system and has prepared the following adjusted trial balance on December 31, 2007:
|
Debit |
Credit |
|
|
Cash |
$2,000 |
|
|
Accounts receivable |
2,700 |
|
|
Allowance for doubtful accounts |
$250 |
|
|
Inventory |
6,500 |
|
|
Prepaid insurance |
800 |
|
|
Land |
5,200 |
|
|
Buildings and equipment |
31,000 |
|
|
Accumulated depreciation |
15,000 |
|
|
Accounts payable |
3,100 |
|
|
Salaries payable |
420 |
|
|
Unearned rent |
360 |
|
|
Income taxes payable |
2,625 |
|
|
Note payable (due July 1, 2011) |
5,000 |
|
|
Interest payable (due July 1, 2011) |
750 |
|
|
Capital stock (1,500 shares) |
9,000 |
|
|
Retained earnings, January 1, 2007 |
6,770 |
|
|
Dividends distributed |
1,200 |
|
|
Sales revenue |
33,000 |
|
|
Sales returns |
2,100 |
|
|
Rent revenue |
1,440 |
|
|
Cost of goods sold |
15,040 |
|
|
Selling expenses |
4,800 |
|
|
Administrative expenses |
3,000 |
|
|
Interest expense |
750 |
|
|
Income tax expense |
2,625 |
|
|
Totals |
$77,715 |
$77,715 |
Required
Prepare in proper form for 2007 the company’s: (1) income statement, (2) retained earnings statement, (3) ending balance sheet, and (4) closing entries in its general journal.