P5-3B Huffman Department Store is located in midtown Metropolis. During the past several

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P5-3B Huffman Department Store is located in midtown Metropolis. During the past several
years, net income has been declining because of suburban shopping centers. At the end of the
company’s fiscal year on November 30, 2008, the following accounts appeared in two of its trial
balances.

Unadjusted Adjusted Unadjusted Adjusted
Accounts Payable $ 47,310 $ 47,310 Interest Revenue $ 5,000 $ 5,000
Accounts Receivable 11,770 11,770 Merchandise Inventory 36,200 36,200
Accumulated Depr.—Delivery Equip. 15,680 19,680 Notes Payable 46,000 46,000
Accumulated Depr.—Store Equip. 32,300 41,800 Prepaid Insurance 13,500 4,500
Cash 8,000 8,000 Property Tax Expense 3,500
Common Stock 50,000 50,000 Property Taxes Payable 3,500
Cost of Goods Sold 633,220 633,220 Rent Expense 19,000 19,000
Delivery Expense 8,200 8,200 Retained Earnings 34,200 34,200
Delivery Equipment 57,000 57,000 Salaries Expense 120,000 120,000
Depr. Expense—Delivery Equip. 4,000 Sales 850,000 850,000
Depr. Expense—Store Equip. 9,500 Sales Commissions Expense 8,000 14,000
Dividends 12,000 12,000 Sales Commissions Payable 6,000
Insurance Expense 9,000 Sales Returns and Allowances 10,000 10,000
Interest Expense 8,000 8,000 Store Equip. 125,000 125,000
Utilities Expense 10,600 10,600

Analysis reveals the following additional data.

1. Salaries expense is 75% selling and 25% administrative.
2. Insurance expense is 50% selling and 50% administrative.
3. Rent expense, utilities expense, and property tax expense are administrative expenses.
4. Notes payable are due in 2011.
Instructions
(a) Prepare a multiple-step income statement, a retained earnings statement, and a classified
balance sheet.
(b) Journalize the adjusting entries that were made.
(c) Journalize the closing entries that are necessary.