Financial Accounting: Comprehensive Problem 8 Madson Corporation's balance sheet at December

Financial Accounting 
Comprehensive Problem 8 
Madson Corporation's balance sheet at December 31, 2013, is presented below. 
MADSON CORPORATION 
Balance Sheet 
January 31, 2013 
Cash 13,700 Accounts payable 8,800 
Accounts receivable 21,100 Common stock 16,400 
Allowance for doubtful accounts (810) Retained earnings 18,040 
Inventory 9,250 
$43,240 $43,240 

During January 2014, the following transactions occurred. Madson uses the perpetual inventory method. 
Jan. 1 Madson accepted a 4-month, 8% note from Matheny Company in payment of Matheny's $3,600 account. 
3 Madson wrote off as uncollectible the accounts of Payton Corporation ($400) and Cruz Company ($300). 
8 Madson purchased $17,690 of inventory on account. 
11 Madson sold for $28,000 on account inventory that cost $17,380. 
15 Madson sold inventory that cost $630 to Rich Jenson for $1,200. Jenson charged this amount on his Visa First Bank card. The service fee charged Madson by First Bank is 3%. 
17 Madson collected $20,300 from customers on account. 
21 Madson paid $16,670 on accounts payable. 
24 Madson received payment in full ($300) from Cruz Company on the account written off on January 3. 
27 Madson purchased advertising supplies for $1,460 cash. 
31 Madson paid other operating expenses, $3,210. 

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, 2014, accounts receivable. 
3. A count of advertising supplies on January 31, 2014, reveals that $450 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; round to whole dollars.) 

Instructions: 
a. Prepare journal entries for the transactions listed above and adjusting entries. (Round answers to 0 decimal places, e.g. 1,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 
(Include entries for cost of goods sold using the perpetual system.)  
b. Prepare an adjusted trial balance at January 31, 2014. 
c. Prepare an income statement and a retained earnings statement for the month ending January 31, 2014, and a classified balance sheet as of January 31,2014. 
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