account balances taken from the ledger of high flying logistics 239281

Account balances taken from the ledger of High Flying Logistics Co. on December 31, 2011,

follow:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,000

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,000

Allowance for Bad Debts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,000

Long-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,500

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,300

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,500

Accumulated Depreciation—Buildings . . . . . . . . . . . . . . . . . . . . 32,560

Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,800

Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,500

Capital Stock, $5 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

Retained Earnings, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . 26,950

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,540

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,000

Sales Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,560

Sales Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,440

Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,420

Selling Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,300

Office Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,200

Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000

Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,100

Taxes—Real Estate and Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,800

Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750

Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,300

Information relating to adjustments on December 31, 2011, follows:

(a) Allowance for Bad Debts is to be increased by $2,200.

(b) Buildings have a salvage value of $7,500. They are being depreciated at the rate of 10% per year.

(c) Accrued selling expenses are $9,300.

(d) There are supplies of $850 on hand.

(e) Prepaid insurance relating to 2012 totals $3,800.

(f) Total interest revenue earned in 2011 is $1,900.

(g) Accrued real estate and payroll taxes are $3,550.

(h) Accrued interest on the mortgage is $1,980.

(i) Income tax is estimated to be 40% of income.

Instructions:

Prepare a work sheet showing the net income and balance sheet totals for the year ending December 31, 2011.

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