The unadjusted trial balance for Mitchell Pharmacy appears below.

Mitchell Pharmacy

Unadjusted Trial Balance

43830

The following information is available at year end for adjustments:
a. An analysis of insurance policies indicates that $2,180 of the prepaid insurance is coverage for 2020.
b. Depreciation expense for 2019 is $10,130.
c. Four months' interest at 10% is owed but unrecorded and unpaid on the note payable.
d. Wages of $4,950 are owed but unpaid and unrecorded at December 31.
e. Income taxes of $11,370 are owed but unrecorded and unpaid at December 31.
Required:
1. Prepare the adjusting entries.
2. Prepare an income statement, a retained earnings statement, and a balance sheet using adjusted account balances.
3. Why would you not want to prepare financial statements until after the adjusting entries are made?

Debit Credit Account Cash 3,400 64,820 Accounts Receivable Inventory Prepaid Insurance Building Accumulated Depreciation Land 583,400 11,200 230,000 $ 44,000 31,200 25,990 Other Assets Accounts Payable Notes Payable (due 2021) 47,810 150,000 Common Stock 600,000 41,200 950,420 Retained Earnings, 12/31/2018 Service Revenue Wages Expense Interest Expense Totals 871,420 12,000 $1,833,430 $1,833,430