The Murphy Company prepared a trial balance on the following partially completed worksheet for the year ended December 31, 2007:

Additional information:
(a) The equipment is being depreciated on a straight-line basis over a 10-year life, with no residual value;
(b) Salaries accrued but not recorded total $500;
(c) On January 1, 2007 the company had paid three years' rent in advance at $100 per month;
(d) Bad debts are expected to be 1% of total sales;
(e) Interest of $400 has accrued on the note payable; and
(f) The income tax rate is 40% on current income and will be paid in the first quarter of 2008.

Required
1. Complete the worksheet.
2. Prepare financial statements for 2007.
3. Prepare closing entries in the generaljournal.

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Retained Earnings Statement Income Balance Trial Balance Adjustments Statement Accounts Credit Credit Debit Credit Credit Debit Credit Cash Accounts receivable Allowance for doubtful accounts 4,000 8,200 rent 3,600 12,000 3,700 5,000 8,900 0,200 Accounts payable Notes payable (due 7/1/08) Retainec Dividends distributed Sales revenues Cost of goods sold Salaries expense Utilities e 1,000 45,000 21,000 3,300 4.400 85,100 Totals 85,100