The following list summarizes the transactions that took place during a start ups secondyear of operations. Using the information below(and assuming FIFO for inventory), prepare a list of the appropriate journal entries, including any necessary adjusting entries, and create a set of financial statements(i.e., balance sheet, income statement, and statement of cash flows).Once you have created the financial statements, provide the appropriate closing entries.Recall that there were 150 units of inventory,which had been purchased at $10 per unit, left at the end of Year One. Also calculate what the LIFO adjustment would bein Year Two.Transactions and information for the year:

a.

Ordered and received 200 units of inventory

purchased on account

for $11 each

b.

Delivered 150 units of inventoryto customer who ordered on account for $16 each

c.

At the start of the year, purchased a small R&D business

for $85 consisting of the following

items (fair value in parentheses):

Land

($20)

Patents

($50)

w/ 10 years of useful life remaining

d.

Spent $25 on research and development.

e.

Ordered and received 100 units of inventory purchased on account for $13 each

f.

A customer placed an order on account for

250 units at $17 each

.

220 units were delivered.

g.

Incurred $800 of wages expense

h.

Collected $5000 of accounts receivable

i.

Paid $700 of wages payable

j.

Paid $4000 of accounts payable

k.

Paid $200 of taxes payable

l.

Spent $50 at end of year to repair PPE

($15)

and to improve PPE ($35).

Revised useful life is 5

more years.

Since the improvements occurred at the end of Year Two, the revised depreciation

scheme will only apply to Year Three.

m.

Estimated tax rate is 35%