Aimes Corporation's balance sheet at December 31, 2024, is presented below.

During 2025, the following transactions occurred. Aimes uses a perpetual inventory system.

1. Aimes paid \(\$ 2,500\) interest on the bonds on January 1,2025 .

2. Aimes purchased \(\$ 241,100\) of inventory on account.

3. Aimes sold for \(\$ 480,000\) cash inventory which cost \(\$ 265,000\). Aimes also collected \(\$ 28,800\) sales taxes.

4. Aimes paid \(\$ 230,000\) on accounts payable.

5. Aimes paid \(\$ 2,500\) interest on the bonds on July 1,2025 .

6. The prepaid insurance \((\$ 5,600)\) expired on July 31 .

7. On August 1, Aimes paid \(\$ 10,200\) for insurance coverage from August 1, 2025, through July 31, 2026.

8. Aimes paid \(\$ 17,000\) sales taxes to the state.

9. Paid other operating expenses, \(\$ 91,000\).

10. Redeemed the bonds on December 31,2025 , by paying \(\$ 48,000\) plus \(\$ 2,500\) interest.

11. Issued \(\$ 90,000\) of \(8 \%, 10\)-year bonds on December 31,2025 , at 103 . The bonds pay interest every June 30 and December 31.

Adjustment data:

1. Recorded the insurance expired from item 7.

2. The equipment was acquired on December 31, 2024, and will be depreciated on a straight-line basis over 5 years with a \(\$ 3,000\) salvage value.

3. The income tax rate is \(30 \%\). 

Instructions

(You may want to set up \(\mathrm{T}\)-accounts to determine ending balances.)

a. Prepare journal entries for the transactions listed above and adjusting entries.

b. Prepare an adjusted trial balance at December 31, 2025.

c. Prepare an income statement and a retained earnings statement for the year ending December 31, 2025, and a classified balance sheet as of December 31, 2025.

Transcribed Image Text:

Cash Inventory Prepaid insurance Equipment $ 30,000 30,750 5,600 38,000 $104,350 Aimes Corporation Balance Sheet December 31, 2024 Accounts payable Interest payable Bonds payable Common stock Retained earnings $ 13,750 2,500 50,000 25,000 13,100 $104,350