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The following unadjusted trial balance has been extracted from the records of Van Loo Merchants Inc. at December 31, 2016, its fiscal year-end. The balances for share capital and retained earnings have not changed during the year. The company uses the perpetual inventory system.
Required:
- Prepare adjusting entries for the following:
- The balance in the Prepaid Rent account consists of equal amounts of rent for the months of December 2016 and January 2017.
- Interest on the bank loan applicable to the month of December amounts to $600 has not yet been recorded as interest payable.
- A December telephone bill owing of $50 has not been recorded.
- The balance in the Prepaid Insurance account applies equally to each of the thirteen months ended December 31, 2017.
- A physical count indicates that $10,000 of merchandize inventory is on hand at December 31, 2016.
- Prepare an adjusted trial balance at December 31, 2016.
- Prepare a classified income statement and statement of changes in equity for the year ended December 31, 2016, and a classified balance sheet at December 31.
- Prepare closing entries. Include general ledger account numbers and a brief description for each entry.
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