Art Imaging Company was organized on April 1 of the current year. On April 2, Art Imaging Company prepaid $54,000 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account. Art Imaging Company is also required to pay in January an annual tax (on property) for the previous calendar year. The estimated amount of the property tax for the current year (April 1 to December 31) is $26,500.

CHART OF ACCOUNTS

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Insurance
15	Land
16	Equipment
17	Accumulated Depreciation-Equipment
19	Accumulated Depreciation-Automobiles
20	Prepaid Taxes

	LIABILITIES
21	Accounts Payable
22	Unearned Fees
23	Salaries Payable
24	Taxes Payable

	EQUITY
31	John Doe, Capital
32	John Doe, Drawing

	REVENUE
41	Fees Earned

EXPENSES

51

Advertising Expense

52

Insurance Expense

53

Rent Expense

54

Salary Expense

55

Supplies Expense

56

Utilities Expense

57

Depreciation Expense

58

Taxes Expense

59

Miscellaneous Expense

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5

Required:

A.

Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year. Refer to the Chart of Accounts for exact wording of account titles.

B.

What is the amount of tax expense for the current year?