Pinkerton Corporation's trial balance at December 31, 2010, is presented below.?

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Pinkerton Corporation's trial balance at December 31, 2010, is presented below. All 2010 transactions have been recorded except for the items described after the trial balance:




Debit
Credit
Cash
$ 28,000

Accounts Receivable
36,800

Notes Receivable
10,000

Interest Receivable
–0–

Merchandise Inventory
36,200

Prepaid Insurance
3,600

Land
20,000

Building
150,000

Equipment
60,000

Patent
9,000

Allowance for Doubtful Accounts

$ 500
Accumulated Depreciation—Building

50,000
Accumulated Depreciation—Equipment

24,000
Accounts Payable

27,300
Salaries Payable

–0–
Unearned Rent

6,000
Notes Payable (short-term)

11,000
Interest Payable

–0–
Notes Payable (long-term)

35,000
Common Stock

50,000
Retained Earnings

63,600
Dividends
12,000

Sales

900,000
Interest Revenue

–0–
Rent Revenue

–0–
Gain on Disposal

–0–
Bad Debts Expense
–0–

Cost of Goods Sold
630,000

Depreciation Expense—Buildings
–0–

Depreciation Expense—Equipment
–0–

Insurance Expense
–0–

Interest Expense
–0–

Other Operating Expenses
61,800

Amortization Expense—Patents
–0–

Salaries Expense
110,000

Total
$1,167,400
$1,167,400


Unrecorded transactions

1.
On May 1, 2010, Pinkerton purchased equipment for $16,000 plus sales taxes of $800 (all paid in cash).

2.
On July 1, 2010, Pinkerton sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2010, was $1,800; 2010 depreciation prior to the sale of equipment was $450.

3.
On December 31, 2010, Pinkerton sold for $5,000 on account inventory that cost $3,500.

4.
Pinkerton estimates that uncollectible accounts receivable at year-end are $4,000.

5.
The note receivable is a one-year, 8% note dated April 1, 2010. No interest has been recorded.

6.
The balance in prepaid insurance represents payment of a $3,600, 6-month premium on September 1, 2010.

7.
The building is being depreciated using the straight-line method over 30 years. The salvage value is $30,000.

8.
The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.

9.
The equipment purchased on May 1, 2010, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.

10.
The patent was acquired on January 1, 2010, and has a useful life of 9 years from that date.

11.
Unpaid salaries at December 31, 2010, total $2,200.

12.
The unearned rent of $6,000 was received on December 1, 2010, for 3 months rent.

13.
Both the short-term and long-term notes payable are dated January 1, 2010, and carry a 10% interest rate. All interest is payable in the next 12 months.

14.
Income tax expense was $15,000. It was unpaid at December 31.

Instructions

(a)
Prepare journal entries for the transactions listed above.

(b)
Prepare an updated December 31, 2010, trial balance.
Totals $1,213,150

(c)
Prepare a 2010 income statement and a 2010 retained earnings statement.
Net income $58,000

(d)
Prepare a December 31, 2010, balance sheet.
Total assets $258,700