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.