Listed below are the unadjusted general ledger account balances of Franklin Co. at December 31, 2010 (amounts are presented at their normal balance):
- Cash 10,400
- Accounts Receivable 2,500
- Office Supplies 950
- Prepaid Insurance 2,400
- Building 100,000
- Accumulated Depreciation - Building60,000
- Truck 36,000
- Accumulated Depreciation - Truck 0
- Accounts Payable 8,000
- Unearned Rent Revenue 1,600
- Note Payable 10,000
- Common Stock 25,000
- Retained Earnings 26,750
- Dividends 2,500
- Sales Revenue 43,400
- Rent Revenue 4,000
- Cost of Goods Sold 12,000
- Wage Expense 9,500
- Insurance Expense 0
- Depreciation Expense - Building 2,500
- Depreciation Expense - Truck 0
- Supplies Expense 0
Additional information for Franklin Company is available on December 31, 2010, the end of an annual accounting period.
a. Franklin Company purchased a 2-year insurance policy on January 1, 2010 and debited Prepaid Insurance for $2,400.
b. On November 1, 2010, a tenant in a building owned by Franklin Company paid two months rent in advance. The amount received was credited to Unearned Rent Revenue.
c. A physical count of office supplies at December 31 revealed that there was $400 of supplies on hand.
d. The truck was acquired on August 1. Franklin estimates the truck will have a useful life of 5 years and no salvage value. The depreciation on the building has already been recorded.
e. Wages of $2,000 earned by factory employees for the last week of December were not paid until the first pay date in January.
Required: Using the templates provided:
1. Post the unadjusted balances at December 31 to ‘T' accounts.
2. Prepare the necessary adjusting journal entries in proper format (omit explanations). Reference each adjusting journal entry with the letter corresponding to the information provided above. Accounts may need to be created.
3. Post the adjusting entries to the ‘T' accounts.
4. Prepare an adjusted trial balance at December 31, 2010.
5. Prepare an income statement, statement of retained earnings and balance sheet in proper format for 2010.