As a recently hired accountant for a small business, Bearing, Inc., you are provided with last year's balance sheet, income statement, and post-closing trial balance to familiarize yourself with the business.

You are also given the following information that summarizes the business activity for the current year, 2012.
a. Issued 6,000 additional shares of capital stock for $30,000 cash.
b. Borrowed $10,000 on January 2, 2012, from Metropolis Bank as a long-term loan. Interest for the year is $700, payable on January 2, 2012.
c. Paid $5,100 cash on September 1 to lease a truck for one year.
d. Received $1,800 on November 1 from a tenant for six months' rent.
e. Paid $900 on December 1 for a one-year insurance policy.
f. Purchased $250 of supplies for cash.
g. Purchased inventory for $80,000 on account.
h. Sold inventory for $105,000 on account; cost of the merchandise sold was $60,000.
i. Collected $95,000 cash from customers' accounts receivable.
j. Paid $65,000 cash for inventories purchased during the year.
k. Paid $34,000 for sales reps' salaries, including $3,500 owed at the beginning of 2012.
l. No dividends were paid during the year.
m. The income taxes payable for 2011 were paid.
n. For adjusting entries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities.
o. At year-end, $400 worth of supplies are on hand.
p. At year-end, an additional $4,000 of sales salaries are owed, but have not yet been paid.
q. Income tax expense is based on a 35% corporate tax rate.
You are asked to do the following:
1. Journalize the transactions for the current year, 2012, using the accounts listed on the financial statements and other appropriate accounts (you may omit explanations).
2. Set up T-accounts and enter the beginning balances from the December 31, 2011, post-closing trial balance for Bearing. Post all current year journal entries to the T-accounts.
3. Journalize and post any necessary adjusting entries at the end of 2012. 4. After the adjusting entries are posted, prepare a trial balance, a balance sheet, and an income statement for 2012.
5. Journalize and post closing entries for 2012 and prepare a post-closing trialbalance.

Transcribed Image Text:

Cash Accounts receivable Inventory Supplies. Total assets Liabilities: Accounts payable Salaries payable. Income taxes payable. Total liabilities.. Stockholders' equity: Capital stock (10,000 shares outstanding) Retained earnings. Total stockholders' equity.. Total liabilities and stockholders' equity. Sales revenue Rent revenue. Total revenues. Less cost of goods sold Gross margin Less operating expenses: Supplies expense Salaries expense Miscellaneous expense Liabilities and Stockholders' Equity Bearing, Inc. Balance Sheet December 31, 2011 Assets Bearing, Inc. Income Statement For the Year Ended December 31, 2011 Income before taxes Less income taxes Net income. Earnings per share ($15,210 + 10,000 shares) $22,100 27,000 13,500 600 $17,000 3,500 3,200 $20,000 19,500 $143,000 4,000 $ 1,200 31,000 6,400 $63,200 $23,700 39,500 $63,200 $147,000 85,000 $ 62,000 38,600 $ 23,400 8,190 $ 15,210 S 1.52