Balance sheet accounts are provided in the table below. These are balances as of June $30,2024.*$The

debits and credits do not equal$/$balance because the net income earned so far this year $($$$81,000)$ has not

yet been included in retained earnings. This amount will show up as part of the net income when you

prepare the financial statements.

The following information relates to the revenues earned and expenses incurred during the first half of

$2024.$

Transactions occurring in $2024$ but not considered in the current net income of $81,000$ are as

follows:

On July $1^{st},$ the corporation entered into a lease agreement for a machine that qualifies as

a capital lease. The lease calls for annual lease payments of $$26,269$ over a six$-$year lease

term, with the first payment at July $1^{st},$ the lease's inception. The interest rate is $5\%.$

$*($Round your answer to the nearest whole dollar$).$

On July $1^{st},$ the corporation sold a $$15,000,5-$year bond with a stated rate of $8\%.$ The

effective yield on the bonds is $10\%.$ Interest on the bond is paid semiannually on January

$1^{st}$ and July $1^{st.}.$ The company uses the effective$-$interest method to amortize any bond

discount or premium. ${?}^{**}($Round your answer to the nearest whole dollar$).$

On September $20$ th $,$ the company sold its shares in Hobokin Company, resulting in a loss

of $$1,000($pretax$).$ See the portfolio tables below.

When its president died, on October $8^{th},$ the corporation realized $$110,000$ from an

insurance policy. The cash surrender value of this policy had been carried on the books as

an investment in the amount of $$10,000($the gain is nontaxable$).$

On November $1$ st$,$ Tri$-$Star, Inc. filed a suit against the corporation, seeking damages for

patent infringement. Legal counsel believes that it is probable that the company will lose

the lawsuit to Tri$-$Star and it is reasonably estimable that the corporation will have to pay

Tri$-$Star $$10,000.$

On November ${15}^{th},$ the corporation disposed of its wholesale division at a loss of $$5,000$

before taxes. The wholesale operations were shut down at the beginning of the year. This

transaction meets the criteria for discontinued operations. The assets associated with this

sale are being classified as Assets Held$-$For$-$Sale.

The corporation decided to change its method of inventory pricing from average cost to

the FIFO method. The effect of this change on prior years is to increase $2022$ income by $$60,000$ and decrease $2023$ income by $$20,000$ before taxes. The FIFO method has been used for $2024.$ The tax rate on these items is $35\%.$

$8.$ On December ${18}^{th},$ the corporation purchased $2,000$ shares of its own common stock at $$20$ a share.

$9.$ On December ${20}^{th},$ the corporation paid off the current portion of the note payable along with the $$15,000$ in interest that had been accrued.

$10.$ December $31$st$,$ interest on the lease has accrued.

$11.$ December $31$ st$,$ interest on the bonds has accrued.

$12.$ The company's products carry a one$-$year warranty against manufacturer's defects. Warranty costs are expected to be $1\%$ of net sales.

$13.$ At the beginning of $2023,$ the corporation purchased a piece of equipment for $$54,000,$ salvage value of $$9,000,$ and that had a useful life of $6$ years. The bookkeeper used straight$-$line depreciation for $2023$ and $2024.$ However, in $2024,$ the bookkeeper failed to deduct the salvage value in computing the depreciation base $($an error was made$).$ The journal entry for this year's depreciation has already been made, but a correcting entry is required to fix the mistake.

$14.$ Adjust the Trading securities and AFS securities to their respective fair values. See the portfolio tables below.

Portfolio Tables

$\backslash$table$[[$AFS Securities Portfolio,Cost,Fair Value $2023,$Fair Value $2024],[$Disney Corporation,$$5,000,$$$8,000,$$$10,000],[$Monster Truck, Inc.,$25,000,20,000,22,000],[$Hobokin Company,$20,000,17,000\_,],[$Totals$,$$$50,000,$$$45,000,$$$32,000],[$Trading Securities Portfolio,Cost,Fair Value $2023,$Fair Value $2024],[$GM Company,$$15,000,$$$20,000,$$$23,000],[$Shaffer Corporation,$35,000\_,30,000\_,34,000\_],[$Totals$,$$$50,000,$$$50,000,$$$57,000]]$

Instructions

A$.$ Journalize transactions $1$