Comprehensive Accounting Cycle Review 10 (Part Level Submission) Pronghorn Corp's balance sheet at December 31, 2016, is presented below PRONGHORN CORP Balance Sheet December 31, 2016 Cash Inventory Prepaid insurance Equipment $32,500 Accounts payable $13,300 2,410 48,200 26,300 Retained earnings $17,840 $108,050 30,850 Interest payable 6,000 Bonds payable 38,700 Common stock $108,050 During 2017, the following transactions occurred. Pronghorn uses a perpetual inventory system 1. Pronghorn paid $2,410 interest on the bonds on January 1, 2017 2. Pronghorn purchased $243,100 of inventory on account. 3. Pronghorn sold for $492,000 cash inventory which cost $269,000. Pronghorn also collected $29,520 sales taxes 4. Pronghorn paid $233,000 on accounts payable 5. Pronghorn paid $2,410 interest on the bonds on July 1, 2017 6. The prepaid insurance ($6,000) expired on July 31 7. On August 1, Pronghorn paid $10,200 for insurance coverage from August 1, 2017, through July 31, 2018 8. Pronghorn paid $16,000 sales taxes to the state 9. Paid other operating expenses, $87,000 Redeemed the bonds on December 31, 2017, by paying $46,300 plus $2,410 interest. Issued $86,000 of 8% bonds on December 31, 2017, at 103. The bonds pay interest every June 30 and December 31 10. 11. Adjustment data 12. Recorded the insurance expired from item 7 13. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $2,700 salvage value 14. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)