Financial Accounting: Comprehensive Problem 8 (CP8) Posada Corporation’s balance sheet

Financial Accounting Comprehensive Problem 8 (CP8) Posada Corporation’s balance sheet at December 31, 2009, is presented below POSADA CORPORATION Balance Sheet December 31, 2009 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 41,280 41,280 During January 2010, the following transactions occurred. Posada uses the perpetual inventory method. Jan 1 Posada accepted a 4-month, 12% note from Allen Company in payment of Alien's $1,000 account. Jan 3 Posada wrote off as uncollectible the accounts of Ex Corporation ($450) and Files Company ($230). Jan 8 Posada purchased $17,200 of inventory on account. Jan 11 Posada sold for $25,000 on account inventory that cost $17,500. Jan 15 Posada sold inventory that cost $700 to Ben Borke for $1,000. Borke charged this amount on his Visa First Bank card. The service fee charged Posada by First Bank is 3%. Jan 17 Posada collected $22,900 from customers on account. Jan 21 Posada paid $16,300 on acounts payable. Jan 24 Posada received payment in full ($230) from Files Company on the account written off on January 3. Jan 27 Posada purchased advertising supplies for $1,400 cash. Jan 31 Posada paid other operating expenses, $3,218. 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, 2010, accounts receivable. 3. A count of advertising supplies on January 31, 2010, 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, 2010. (c) Prepare an income statement and a retained earnings statement for the month ending January 31, 2010, and a classified balance sheet as of January 31, 2010.
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