Hampton Corporation's balance sheet at December 31, 2011, is presented below.
Hampton Corporation
Balance Sheet
December 31, 2011
Cash $24,600
Accounts receivable $45,500
Allowance for doubtful accounts (1,500)
Supplies $4,400
Land $40,000
Buildings $142,000
Accumulated depreciation- buildings (22,000)
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$233,000
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Accounts payable $25,600
Common stock ($10 par) $80,000
Retained earnings $127,400
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$233,000
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During 2012, the following transactions occurred.
1. On January 1, 2012, Hampton also issued 1,200 shares of $40 pas, 7% preferred stock for $49,200.
2. On January 1, 2012, Hampton also issued 900 shares of the $10 par value common stock for $21,000
3. Hampton performed services for $320,000 on account.
4. On April 1,2012, Hampton collected fees of $36,000 in advance for services to be performed from April 1, 2012, to March 31, 2013.
5. Hampton collected $276,000 from customers on account.
6. Hampton bought $35,100 of supplies on account.
7. Hampton paid $32,200 on accounts payable.
8.Hampton reacquired 400 shares of its common stock on June 1, 2012, for $28 per share.
9. Paid other operating expenses of $188,200.
10. On December 31, 2012, Hampton declared the annual preferred stock dividend and a $1.20 per share dividend on the outstanding common stock, all payable on January 15, 2013.
11. An account receivable of $1,700 which originated in 2011 is written off as uncollectible.
Adjustment date:
1. A count of supplies indicates that $5,900 of supplies remain unused at year-end.
2. Recorded revenue earned from item 4 above.
3. The allowance for doubtful accounts should have a balance of $3,500 at year end.
4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000.
5. The income tax rate is 30%.
Instructions:
a) Prepare journal entires for the transactions listed above and adjusting entries.
b) Prepare an adjusted trial balance at December 31, 2012.
c) Prepare an income statement and a retained earnings statement for the year ending December 31, 2012, and a classified balance sheet as of December 31, 2012.