Question
Bridgeport Corp. prepares quarterly financial statements. The post-closing trial balance at December 31, 2021, is presented below. BRIDGEPORT CORP. Post-Closing Trial Balance December 31, 2021
Bridgeport Corp. prepares quarterly financial statements. The post-closing trial balance at December 31, 2021, is presented below.
BRIDGEPORT CORP. Post-Closing Trial Balance December 31, 2021 | ||||
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Debit | Credit | |||
Cash | $23,000 | |||
Accounts Receivable | 23,000 | |||
Allowance for Doubtful Accounts | $1,300 | |||
Equipment | 19,000 | |||
Accumulated DepreciationEquipment | 15,000 | |||
Buildings | 106,000 | |||
Accumulated DepreciationBuildings | 15,000 | |||
Land | 20,000 | |||
Accounts Payable | 12,300 | |||
Common Stock | 85,000 | |||
Retained Earnings | 62,400 | |||
$191,000 | $191,000 |
During the first quarter of 2022, the following transactions occurred:
1. | On February 1, Bridgeport collected fees of $15,600 in advance. The company will perform $1,300 of services each month from February 1, 2022, to January 31, 2018. | |
2. | On February 1, Bridgeport purchased computer equipment for $8,100 plus sales taxes of $900. $2,700 cash was paid with the rest on account. Check #455 was used. | |
3. | On March 1, Bridgeport acquired a patent with a 10-year life for $9,000 cash. Check #456 was used. | |
4. | On March 28, Bridgeport recorded the quarters sales in a single entry. During this period, Bridgeport had total sales of $200,000 (not including the sales referred to in item 1 above). All of the sales were on account. | |
5. | On March 29, Bridgeport collected $193,000 from customers on account. | |
6. | On March 29, Bridgeport paid $16,300 on accounts payable. Check #457 was used. | |
7. | On March 29, Bridgeport paid other operating expenses of $95,500. Check #458 was used. | |
8. | On March 31, Bridgeport wrote off a receivable of $200 for a customer who declared bankruptcy. | |
9. | On March 31, Bridgeport sold for $1,940 equipment that originally cost $13,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of December 31, 2021, was $9,600 using the straight line method. (Hint:Record depreciation on the equipment sold, then record the sale.) |
Bank reconciliation data and adjustment data:
1. | The company reconciles its bank statement every quarter. Information from the December 31, 2021, bank reconciliation is:
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2. | Record revenue earned from item 1 above. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. | $25,200 of accounts receivable at March 31, 2022, are not past due yet. The bad debt percentage for these is 4%. The balance of accounts receivable are past due. The bad debt percentage for these is 22.00%. Record bad debt expense. (Hint:You will need to compute the balance in accounts receivable before calculating this.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. | Depreciation is recorded on the equipment still owned at March 31, 2022. The new equipment purchased in February is being depreciated on a straight-line basis over 5 years and salvage value was estimated at $1,200. The old equipment still owned is being depreciated over a 10-year life using straight-line with no salvage value. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. | Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. | Amortization is recorded on the patent. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7. | The income tax rate is 30%. This amount will be paid when the tax return is due in April. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) Enter the December 31, 2021, balances in ledger accounts using T-accounts. (Post entries in the order displayed in the problem statement.)
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