SABRINA CORPORATION UNADJUSTED TRIAL BALANCE DECEMBER 31,

SABRINA CORPORATION
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2019
DEBIT CREDIT
CASH 36,868
FV-NI Short Term INVESTMENTS 30,300
ACCOUNTS RECEIVABLE 425,755
ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,400
INVENTORY 402,912
NOTES RECEIVABLE 30,000
OFFICE BUILDING 500,000
ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000
OFFICE EQUIPMENT 120,000
ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT) 0
ACCOUNTS PAYABLE 205,258
DIVIDENDS PAYABLE 7,328
NOTES PAYABLE 60,000
PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2019 100,000
COMMON STOCK, 100,000  OUTSTANDING ON DEC 31, 2019 185,000
RETAINED EARNINGS 280,623
SALES REVENUE 3,590,524
SALES DISCOUNTS 20,571
SALES RETURNS AND ALLOWANCES 51,259
PURCHASES 2,600,824
PURCHASES DISCOUNTS 35,678
TRANSPORTATION – IN 25,235
SALARIES EXPENSE 320,523
RENT EXPENSE 40,955
INSURANCE EXPENSE 16,456
SUPPLIES EXPENSE 25,673
GAIN ON SALE OF ASSETS OF DISCONTINUED DIVISION 13,650
ADVERTISING EXPENSE 18,860
OPERATING LOSS ON DISCONTINUED DIVISION 21,998
UTILITIES EXPENSE 28,540
CASH DIVIDENDS DECLARED -Preferred Dividends 29,732
CASH DIVIDENDS DECLARED -Common Dividends 20,000
TOTAL 4,766,461

4,766,461

NOTE: All revenue, expense, gain and loss figures above are before tax.
This company uses a Periodic Inventory system.
 
 
1. There was a customer that has gone bankrupt in 2019 and will not pay his $4480 account. This has not been recorded yet.
 
Also, Sabrina Corp. uses the allowance method to record Bad Debts based on an estimate of 4% of ending Accounts Receivable.
 
2. The Office Building is depreciated at a rate of 5% of cost per year.
 
The Office Equipment is depreciated straight line and has a residual value of $5,000 . It was purchased on March 1, 2019
and it is estimated to have a useful life of 6 years.
 
3. A one year 6% note payable of $60,000 was signed on October 1, 2019.
 
4. On December 1, 2019, a customer signed a 5% note receivable for $30,000 due in 90 days.
 
5. FV- NI Short term investments have a fair market value of $32,300 on December 31, 2019. Investments need to
be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.
 
6. The insurance expense includes : Policy A, cost of $12,700, three year term, paid in advance on April 1, 2019
AND Policy B, cost of $3,756, two year term paid in advance on June 1, 2019.
 
7. The company performed a year end physical count of its inventory as at December 31, 2019.
The amount of inventory on hand at December 31, 2019 amounted to $421,200.
Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.
 
 
a. Prepare the Adjusting Journal Entries required for the 2019 fiscal year at December 31, 2019.
b. Prepare a detailed multi-step income statement (including detailed EPS presentation) for the year ended December 31, 2019.

 
   NOTE: Assume that the tax rate was 30%.    
 
Also, in 2019 common stock was issued as follows:
20,000 commons shares were issued on April 1 and 30,000 commons shares were issued on August 1.
The amount of common stock outstanding at the beginning of the year (January 1, 2019) was 50,000 shares.

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