Balaces (unadjusted)

Account Debit Credit
Cash 60,260
A/R 38,000
Allowance for D/A 2,000
Inventory (Periodic) 80,000
Sales Supplies Inventory 900
Long-Term Note Rec, 14% 12,000
Equipment 180,000
Accum Dep, Equip. 64,000
Patent 8,400
Interest Receivable 23,000
Interest Payable
Income Taxes Payable
Property Taxes Payable
Unearned Rent Revenue
Mortgage Payable, 12% 60,000
Common Stock, Par 10 100,000
Contib. Capital In excess of Par 15,000
Retained Earnings 32,440
Sales Revenue 700,000
Investment Revenue 1,120
Rent Revenue 3,000
Purchases 400,000
Freight-In 7,000
Purchase Returns 2,000
Selling Expense 164,400
G&A Expenses 55,000
Interest Expense 6,600
Income Tax Expense
Extraodinary Gain (Pretax) 10,000
_ _ _ _ _ _ _ _ _ _
$1,012,560 $1,012,560

Additional data for adjustments and other purposes:

a. Estimated bad debt loss rate is 0.25% of credit sales. Credit sales for the year amounted to $200,000. This is a selling expense.

b. Ending inventory, December 31, 19D, $105,000.

c. Interest on the long-term note receivable was last collected August 31, 19D

d. Estimated useful life of the equipment is 10 years; residual balue, $20,000. Allocate 10% to G&A expenses and the balance to selling expenses. Assume straight-line depreciation.

e. Estimated remaining economic life of the patent is 14 years (from January 1, 19D) and no residual value. Assume straight-line amortization to selling expense (used in sales promotion).

f. Interest on the mortgage payable was last paid on November 30, 19D.

g. On June 1, 19D, the sompnay rented some office space to a tenant for one year and collected $3,000 rent in advance for the year; the entire amount was credited to Rent Revenue.

h. On December 31, 19D, received a statement for calendar year 19D property taxes amounting to $1,300. The amount is due February 15, 19E. Assume it will be paid on that date and that it is a selling expense. None of the amount had been recorded during 19D.

i. Sales supplies on hand at december 31, 19D, amounted to $300 (selling expense).

j. Assume an average 40% corporate income tax rate on all items including the extraodinary gain.