Adjustments Needed

ABC Corporation Unadjusted Trial Balance December 31, 2014 Debit Credit Cash $975,232 Short term investments 167,000 Fair value adjustment (Trading) - Accounts receivable 190,300 Allowance for doubtful accounts $- Inventory - Purchases 350,000 Prepaid insurance 24,600 LT (Debt) investments (HTM) 177,824 Land 75,000 Building 150,000 Accumulated depreciation: building 4,000 Equipment 60,000 Accumulated depreciation: equipment 20,000 Patent 37,500 Accounts payable 75,240 Notes payable 235,000 Income taxes payable 63,800 Unearned rent revenue 36,000 Bonds Payable 800,000 Premium on Bonds Payable 61,771 Common stock 86,000 PIC In Excess of Par-Common Stock 13,000 Retained earnings - Treasury stock 49,000 Dividends 41,000 Sales Revenue 1,192,945 Advertising expense 8,400 Wages expense 67,600 Office expense 21,700 Amortization expense - Depreciation expense 24,000 Utilities expense 31,000 Insurance expense 73,800 Income taxes expense 63,800 $2,587,756 $2,587,756 4 Per timecards, from the last payroll date through December 31, 2014, ABC's employees have worked a total of 250 hours. Including payroll taxes, ABC's wage expense averages about $51 per hour. The next payroll date is January 5, 2015. The liability for wages payable must be recorded as of 12/31/14. 5 On November 30, 2014, ABC borrowed $235,000 from American National Bank by issuing an interest-bearing note payable. This loan is to be repaid in three months (on February 28, 2015), along with interest computed at an annual rate of 6%. The entry made on November 30 to record the borrowing was: (for Statement of Cash Flow purposes, consider a financing item) Dr Cash 235,000 Cr Notes payable 235,000 On February 28, 2015 ABC must pay the bank the amount borrowed plus interest. Assume the beginning balance for Notes Payable is correct. Interest through 12/31/14 must be accrued on the $235,000 note. 6 ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete physical inventory at year-end. A physical count was taken on December 31, 2014, and the inventory on-hand at that time totaled $75,000, which reflects historical cost. Record the 2014 Cost of Goods Sold and the 12/31/14 Inventory adjustment. Additionally, ABC adheres to GAAP by recording ending inventory at the lower of cost and net realizable value at a total inventory level. A review of inventory data further indicated that the current retail sales value of the ending inventory is $110,000 and estimated costs of completion and shipping is 15% of retail. Be sure to make an additional adjustment, if necessary, to properly value ending inventory using the Loss and Allowance methodology. For Income Statement presentation purposes, be sure to use the Loss Method for accounting for adjustments of inventory to market value.