Question: Mulder Corporation's balance sheet at December 31, 2006, is given below.
MULDER CORPORATION Balance Sheet December 31, 2006
|
Cash
|
$13,100
|
Accounts payable
|
$8,750
|
Accounts receivable
|
19,780
|
Common Stock
|
20,000
|
Allowance for doubtful accounts
|
(1,000)
|
Retained earnings
|
12,530
|
Merchandise inventory
|
9,400
|
Total L&SE
|
$41,280
|
Total Assets
|
$41,280
|
|
|
During January 2007, the following transactions occurred. Mulder uses the perpetual inventory method.
Jan.
|
1
|
Mulder accepted a 4-month, 12% note from Alien Company in payment of Alien's $1,000 account.
|
Jan.
|
3
|
Mulder wrote off as uncollectible the accounts of Ex Corporation ($450) and Files Company ($230).
|
Jan.
|
8
|
Mulder purchased $17,200 of inventory on account.
|
Jan.
|
11
|
Mulder sold for $25,000 on account inventory that cost $15,000.
|
Jan.
|
15
|
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%.
|
Jan.
|
17
|
Mulder collected $21,900 from customers on account.
|
Jan.
|
21
|
Mulder paid $16,300 on accounts payable.
|
Jan.
|
24
|
Mulder received payment in full ($230) from Files Company on the account written off on January 3.
|
Jan.
|
27
|
Mulder purchased advertising supplies for $1,400 cash.
|
Jan.
|
31
|
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.)
Instructions;
[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.