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Comprehensive Problem $3($Algo$)$

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Mountain Sports, Incorporated, is a retailer that has engaged you to assist in the preparation of its financial statements at December $31,2024.$ Following are the correct adjusted account balances, in alphabetical order, as of that date. Each balance is the $$normal$$ balance for that account. $($Hint: The $$normal$$ balance is the same as the debit or credit side that increases the account.$)$

Accounts payable$ $12,950$Accounts receivable$2,850$Accumulated depreciation: office equipment$12,600$Additional paid$-$in capital $($common stock$)7,600$Bonds payable $($due December $31,2027)22,700$Cash$14,400$Common stock $(2,300$ shares, $$10$ par value$)23,000$Cost of goods sold$103,355$Deferred income taxes$6,100$Depreciation expense: office equipment$2,500$Dividends declared$4,500$Income tax expense$7,990$Insurance expense$850$Land$39,700$Merchandise inventory$21,000$Notes payable $($due December $31,2025)2,800$Office equipment$42,100$Office supplies$830$Office supplies expense$490$Preferred stock $(290$ shares, $$20$ par value$)5,800$Premium on bonds payable$2,200$Prepaid rent$1,560$Rent expense$5,900$Retained earnings $($January $2024)21,350$Salaries expense$88,045$Sales$226,200$Sales returns and allowances$2,000$Sales taxes payable$3,300$Treasury stock $(400$ common shares at cost$)4,500$Utilities expense$4,030$

Comprehensive Problem $3($Algo$)$ Part $1$

a$.$ Prepare an income statement for the year ended December $31,2024.$