Hassellhouf Company's trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described following the trial balance.

Unrecorded transactions:

1. On May 1, 2020, Hassellhouf purchased equipment for $21,200 plus sales taxes of $1,600 (all paid in cash).

2. On July 1, 2020, Hassellhouf sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2020, was $1,800; 2020 depreciation prior to the sale of the equipment was $450.

3. On December 31, 2020, Hassellhouf sold for $9,000 on account inventorythat cost $6,300.

4. Hassellhouf estimates that uncollectible accounts receivable at year-end is$4,000.

5. The note receivable is a one-year, 8% note dated April 1, 2020. No interest has been recorded.

6. The balance in prepaid insurance represents payment of a $3,600 6-month premium on September 1, 2020.

7. The building are 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, 2020, 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, 2020, and has a useful life of 10 years from that date.

11. Unpaid salaries and wages at December 31, 2020, total $5,200.

12. The unearned rent revenue of $6,000 was received on December 1, 2020, for 3 months' rent.

13. Both the short-term and long-term notes payable are dated January 1, 2020, and carry a 9% interest rate. All interest is payable in the next 12 months.

Instructions

a. Prepare journal entries for the transactions listed above.

b. Prepare an updated December 31, 2020, trial balance.c. Prepare a 2020 income statement and a retained earnings statement.

d. Prepare a December 31, 2020, classified balance sheet.

Transcribed Image Text:

Debit Credit $ 28,000 Cash Accounts Receivable 36,800 Notes Receivable 10,000 Interest Receivable -0- Inventory 36,200 Prepaid Insurance 3,600 Land 20,000 Buildings 150,000 Equipment 60,000 Patents 9,000 Allowance for Doubtful Accounts 500 Accumulated Depreciation-Buildings 50,000 Accumulated Depreciation-Equipment 24,000 Accounts Payable Salaries and Wages Payable 27,300 -0- 6,000 Unearned Rent Revenue Notes Payable (due in 2021) 11,000 Interest Payable -0- Notes Payable (due after 2021) 30,000 Common Stock 50,000 Retained Earnings 63,600 Dividends 12,000 %24 Sales Revenue 905,000 Interest Revenue -0- Rent Revenue -0- Gain on Disposal of Plant Assets -0- Bad Debt Expense -0- Cost of Goods Sold 630,000 Depreciation Expense -0- Insurance Expense -0- Interest Expense Other Operating Expenses -0- 61,800 Amortization Expense -0- Salaries and Wages Expense 110.000 Total $1,167,400 $1,167,400 %24 %24