Comprehensive Problem 10-1 (Part Level Submission) James Corporation's balance sheet at December 31, 2016, is presented below JAMES CORPORATION Balance Sheet December 31, 2016 Cash Inventory Prepaid insurance Equipment $33,000 Accounts payable 31,000 Interest payable 6,240 Bonds payable 39,180 Common stock $12,800 2,600 52,000 23,320 18,700 $109,420 Retained earnings $109,420 During January 2017, the following transactions occurred 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. James paid $2,600 interest on the bonds on January 1, 2017 James purchased $240,100 of inventory on account. James sold for $490,500 cash inventory which cost $268,500. James also collected $34,335 sales taxes James paid $227,000 on accounts payable James paid $2,600 interest on the bonds on July 1, 2017 The prepaid insurance ($6,240) expired on July 31 On August 1, James paid $12,000 for insurance coverage from August 1, 2017, through July 31, 2018 James paid $24,700 sales taxes to the state Paid other operating expenses, $91,700 Retired the bonds on December 31, 2017, by paying $49,000 plus $2,600 interest. Issued $91,000 of 8% bonds on December 31, 2017, at 104 . The bonds pay interest every December 31 Adjustment data: 1. Recorded the insurance expired from item 7 2. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $2,940 salvage value 3. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)