CP9 Pinkerton Corporation’s trial balance

CP9 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