Question

Marigold Corp.’s balance sheet at December 31, 2021, is presented below.

MARIGOLD CORP. Balance Sheet December 31, 2021
Cash		$31,980			Accounts payable		$33,280
Accounts receivable		59,150			Common stock ($10 par)		104,000
Allowance for doubtful accounts		(1,950	)		Retained earnings		165,620
Supplies		5,720
Land		52,000
Buildings		184,600
Accumulated depreciation—buildings		(28,600	)
		$302,900					$302,900

During 2022, the following transactions occurred.

1.		On January 1, Marigold issued 1,560 shares of $40 par, 7% preferred stock for $63,960.
2.		On January 1, Marigold also issued 1,170 shares of the $10 par value common stock for $27,300.
3.		Marigold performed services for $416,000 on account.
4.		On April 1, 2022, Marigold collected fees of $46,800 in advance for services to be performed from April 1, 2022, to March 31, 2023.
5.		Marigold collected $358,800 from customers on account.
6.		Marigold bought $45,630 of supplies on account.
7.		Marigold paid $41,860 on accounts payable.
8.		Marigold reacquired 520 shares of its common stock on June 1 for $28 per share.
9.		Paid other operating expenses of $244,660.
10.		On December 31, 2022, Marigold declared the annual preferred stock dividend and a $1.20 per share dividend on the outstanding common stock, all payable on January 15, 2023.
11.		An account receivable of $2,210 which originated in 2022 is written off as uncollectible.

Adjustment data:

1.		A count of supplies indicates that $7,670 of supplies remain unused at year-end.
2.		Recorded revenue from item 4 above.
3.		The allowance for doubtful accounts should have a balance of $4,550 at year end.
4.		Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $13,000.
5.		The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)

QUESTIONS:

1) Prepare journal entries for the transactions listed above and adjusting entries.

2)Prepare an adjusted trial balance at December 31, 2022.

3)Prepare an income statement.

4) Prepare a retained earnings statement for the year ending December 31, 2022. (List items that increase retained earnings first.)

5) Prepare a classified balance sheet as of December 31, 2022. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

Answer 1