Chapter 4, Problem 4.7P

Preparing the Trial Balance; Adjusting Journal Entries; Preparing Financial Statements. Using the information provided in P4-6, perform the following steps for Tides Tea Company:

Required

1. a. Journalize and post adjusting journal entries based on the following additional information (omit explanations):
2. ■ At December 31, interest in the amount of $2,600 has accrued on the note payable but has not yet been recorded. This amount will be paid on January 31, 2019.
3. ■ The rent payment made on February 28 was for a 12-month lease covering March 1, 2018, to February 29, 2019.
4. ■ Straight-line depreciation for the full year should be recorded on the equipment purchased on February 1. The equipment has a 15-year life and no residual value.
5. ■ A total of $6,000 of supplies remains on hand at the end of the year.
6. ■ Wage payments in the amount of $62,000 must be accrued at year-end.
7. ■ On December 14, Tides received a utilities bill in the amount of $6,200 for the month of November that has not yet been recorded. The amount will be paid in January 2019.
8. b. Prepare an adjusted trial balance as of December 31.
9. c. Prepare an income statement, a statement of shareholders’ equity, and a balance sheet.