Adjustment data for Magnum Therapeutics Inc. for the year ended May 31, 2011, are as follows:a. Wages accrued but not paid at May 31, $1,800b. Depreciation of equipment during the year, $12,500c. Laundry supplies on hand at May 31, $1,900d. Insurance premiums expired, $5,500Instructions1. Using the following integrated financial statement framework, record each adjustment to the appropriate accounts, identifying each adjustment by its letter. After all adjustments are recorded, determine the balances.2. Prepare an income statement and retained earnings statement for the year ended May 31, 2011. The retained earnings balance as of June 1, 2010, was $51,500.3. Prepare a classified balance sheet as of May 31, 2011.4. Prepare a statement of cash flows for the year ended May 31,2011.

Transcribed Image Text:

Balance Sheet + Stockholders' Equity Statement of Income Assets Liabilities Cash Flows Statement Wages Capital Retained Cash + Supplies + Insurance + Equip. - Depret. = Payable + Payable + Stock + Earnings Laundry Prepaid Laundry Acc. Accts. O 50,000 196,000 48,000 Balances, May 31, 2011 250,000 -60,000 7,000 9,000 6,000 Statement of Cash Flows Income Statement Operating (Revenues) Laundry revenue 315,000 315,000 Financing (Capital Stock) 25,000 Wages expense -110,000 Operating (Expenses) -220,000 Rent expense -30,000 Utilities expense Imvesting (Equipment) -80,000 -18,000 Financing (Dvidends) Misc. expense -5,000 -7,500 35,000 Net increase in cash Beginning cash balance, June 1, 2010 13,000 Ending cash balance, May 31, 2011 $48,000