1) The warehouse employees counted the ending inventory on hand at December 31, 2003. Their ending inventory balance is $40,000. (Remember we are using the periodic inventory method.) 2) The supplies department counted the supplies on hand. The balance of supplies at December 31 is $600. 3) The note payable is due in 5 years and was initiated on April 1, 2003. The note payable requires annual interest payments of 10% payable on March 31 of each year. (Note: I used 275 days out of 365 to prorate the interest expense on the note payable) 4) The company has estimated that bad debt expense is equal to one half of a percent (.005) of net sales (sales less sales discounts and returns) . 5) December salaries and wages will be paid on January 5, 2004. December salaries and wages are $5,000. 6) Two of the fixed assets have not been completely depreciated. These two items are a mainframe computer purchased for $20,000 in 2002 and a personal computer purchased in the current year on October 1, 2003 for $3,000. Computers are depreciated using the straight line method over 3 years. The salvage value is 0. 7) The companys income tax rate is 15%. (For taxes most companies complete the other adjusting entries and then post them to the GL. Then prepare a preliminary income statement and calculate the taxes. Then they can make the adjusting entry for taxes and post to the general ledger).

Instructions:

Post these entries to the General Ledger and prepare a trial balance.

One Time Hits Unadjusted Trial Balance December 31, 2003 Credits Debits 30,750.00 13,850.00 2,000.00 50,000.00 1,000.00 40,000.00 20,000.00 5,925.00 Account # 10100 10200 10300 10400 10500 15100 15200 20100 20200 20300 20400 25100 30000 30002 30100 30300 40000 50100 50200 50300 50400 50500 50600 50601 50602 50700 Description Cash Accounts Receivable Allowance For Doubtful Accounts Inventory Supplies Fixed Assets Accumulated Depreciation Accounts Payable Salaries and Wages Payable Interest Payable Income Taxes Payable Notes Payable Common Stock Retained Earnings Sales Sales Discounts Purchases Salaries and Wages Office Supplies Promotion and Advertising Other Adminstrative Expenses Depreciation Expenses Interest Expenses Cost of Goods Sold Bad Debt Expense Income Taxes Expense 14,000.00 3,000.00 2,000.00 617,800.00 7,000.00 405,625.00 100,000.00 10,300.00 5,200.00 1,000.00 664,725.00 664,725.00