Question
ANSWER NEEDED ASAP Libra Corporations post-closing trial balance at December 31, 20x5 was as follows: Dr. Cr. Cash $36,000 Accounts receivable 176,000 Allowance for doubtful
ANSWER NEEDED ASAP
Libra Corporations post-closing trial balance at December 31, 20x5 was as follows:
Dr. Cr.
Cash $36,000
Accounts receivable 176,000
Allowance for doubtful accounts $23,000
Inventory 320,000
Prepaid insurance 1,400
Land 40,000
Building 300,000
Accumulated depreciation building 120,000
Equipment 145,000
Accumulated depreciation equipment 38,000
Patents 34,000
Accounts payable 127,000
Salaries payable 5,600
Income taxes payable 12,000
Warranty liability 13,000
Bonds payable 400,000
Common stock 150,000
Retained Earnings 124,600
$1,052,400 $1,052,400
Additional information
The company uses a FIFO perpetual inventory system.
The prepaid insurance is for a one year policy taken out in 20x5 that expires on March 1,
20x6.
The building is being depreciated on a straight-line basis over 40 years.
The equipment is being depreciated using the diminishing method at a rate of 20%.
The patent remaining useful life at December 31, 20x5 is 8 years.
There are 10,000 shares of common stock outstanding.
The following transactions took place during the year:
1. Total sales on account were $2,450,000.
2. Cash collections on accounts receivable totaled $2,510,000.
3. Accounts written off totaled $30,000.
4. Recoveries of previously written off accounts receivable totaled $4,000.
5. Inventory purchased on account totaled $940,000.
6. Inventory costing $16,000 was returned to suppliers.
7. On March 15, an additional 3,000 common shares were issued for $75,000.
Cash disbursements were as follows:
8. Payments on accounts payable $925,000
9. Payments for salaries 310,000
10. Interest payments on bonds payable 26,000
11. Purchase of equipment on January 2 30,000
12. Payments to the Canada Revenue Agency for income taxes 10,000
13. Repurchase of 1,000 common shares on Aug 23 22,000
14. Insurance policy taken out on March 1 one year policy. 2,400
15. Operating expenses paid 130,000
The following adjustments need to be made at year-end:
16. The ending balance of the allowance for doubtful accounts is estimated to be $17,930.
17. An adjustment is made for insurance expense.
18. Depreciation expense on the building, equipment and patents.
19. Salaries payable at December 31, 20x6 amount to $6,500.
20. Dividends of $90,000 were declared and paid on December 15, 20x6.
Required
Prepare journal entries for the above transactions
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Modern Auditing
Authors: Guadarshan S. Gill, Cosserat Graham, Leung Philomena, Coram Paul
5th Edition
0471340723, 978-0471340720
