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Thefollowingselectedaccountbalances(pre-adjusted)aretakenfromtheledgerbookofABCcompanyatDecmber312012:

Cash$2000

accountsreceivable$13000

Allowanceforuncollectibleaccounts$3200(creditbalance)

InventoryDec312012$22000

Long-terminvestments$30000

Buildings(atcost)$45000

Accumulateddepreciationforbuildings$26000(creditbalance)

Otherassets$12800

Accountspayable$8000

Taxespayable$4400

Loanspayable$15000

Capitalstock$40000

RetainedEarningsDec312012$28000

RetainedEarningsJan12012$???

Dividends2012$???

Salesrevenues$98000

Costofgoodssold$42000

Sellingexpense$6000

Wagesandsalaryexpense$12500

Uncollectibleaccountsexpense$400

Miscellaneousgeneralandadministrativeexpenses$11000

Officesuppliesexpense$5400

Insuranceexpense$4800

Interestrevenue$800

Interestexpense$2200

Additionalinformation(tobeusedforadjustingentries)

atheallowanceforuncollectibleaccountsshouldbeincreasedto$3800

baccruedwagesandsalary(notpaid)attheendof2012were$450

cbuildingsaredepreciatedattherateof4%(ofcost)peryear(depreciationisrecognizedattheendofeachyear)

daccruedsellingexpense(notpaid)attheendof2012was$600

eprepaid(unexpired)insurancepremiumattheendoftheyearwas$420(wheninsurancepremiumsarepaidthecompanychargesthemtotheinsuranceexpenseaccount)

faccruedinterestonloansnotpaidattheendof2012was$188

gearnedinterestonlong-terminvestmentnotreceivedasoftheendof2012was$1000

hofficesuppliesunusedasoftheendof2012were$350(whenofficesuppliesarepurchasedthecompanychargestheamountofthesuppliestotheofficesuppliesexpensesaccount)

Required:

1preparethenecessaryadjustingentriesforeachoftheadditionalinformationitemsabove

2computetheadjustedbalanceofeachbalancesheetaccountintheadjustingentriesabove.Noticethatallowanceforuncollectiblesandaccumulateddepreciationarereportedonthebalancesheet.

3computethepre-taxincomeofthecompanyfor2012(afterconsideringtheadjustingentriesabove)

IncomeandREStatement:

DebtCredit

NetSales

Less:Costofsales

Grossprofit

SellingandAdmiExpenses

Incomefromoperation

Otherrevenuesandgains

Interestrevenue

Gainsonsaleofinvestment

Otherexpensesandlosses

Write-offofGW

IncomefromCont.Oper.beforetax

Incometaxes

IncomefromCont.Oper.aftertax

DiscontinuedOperations

Lossonoperations

Lossondosposalofnetassests

Incomebeforeextraorditems

Extraord.Loss

Netincome

Earningpershare:

IFCOaftertax($0.16)

Discontuedoperation

Extraord.loss

Netincome($0.16)

RetainedEarningsStatement:

REatbeg.

Add:Netincome

Less:Dividends

REatend

IFCObeforetax(inerror)

dep.error

IFCObeforetax(errorcorrec.)

lossonsaleofsecs.

gainonlifeinsurancecoverage104000

IFCObeforetax

Incometax(30%)

IncomebeforeDOandExOdltems

lossonDO

extraordloss

Netincome$489050

Nipershare$4.075

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