Consider the following information Marvelous Inc Adjusted Trial Balance 31 Dec 22 (in 000s) (in 000s) DR CR Cash $ 14,250 Accounts Receivable $ 40,300 Prepaid rent $ 600 Unexpired insurance policies $ 4,250 Office supplies $ 530 Office equipment (purchased 6 30 19) $ 15,000 Accumulated depreciation office eqpt $ 10,500 Accounts payable $ 5,650 Notes payable $ 10,000 Unearned rent $ 5,500 Salaries payable $ 2,860 Income tax payable $ 1,230 Common stock $ 20,000 Retained earnings $ 10,800 Dividends $ 1,300 Revenue earned $ 55,070 Telephone expense $ 480 Office supply expense $ 1,500 Depreciation expense office equipment $ 3,000 Rent expense $ 6,700 Officer's life insurance expense $ 800 Salaries expense $ 26,000 Miscellaneous expense $ 3,000 Income taxes expense $ 3,900 Totals $ 121,610 $ 121,610 Upon audit of the above 2022 trial balance, you discover the following issues The company is using straight line depreciation over 5 years for the office equipment The useful life should be changed to 7 years with a salvage value of $2,000 The accrual for employees salary at the end of 2022 should be $2,200 which is the amount the company will have to pay to employees during the first week in January 2023 for work performed during the last week in December The controller mistakenly recorded the purchase of $9,000 computer equipment on September 1, 2021, as an expense in 2021 The computer has a 3 year useful life On February 21, 2021, the company borrowed $10,000 by signing a 4 year 4 note payable The note is a balloon loan with all interest and principal due March 1, 2025, compounded annually No interest was recorded A 3 year officers life insurance policy was purchased on April 1, 2020, for $4,250 The full amount was debited to unexpired insurance at the time The income tax rate is 25 for all years Additional information Miscellaneous expense includes a $2,400 penalty for underpayment of tax and $600 of bank fees for insufficient funds during the month of February Under MACRS equipment has a 7 year life and computers have a 5 year life Unearned rent is all expected to be earned in 2023 Using Excel record any appropriate journal entries and prepare a balance sheet, income statement and statement of retained earnings Required In excel, prepare a 10 column worksheet and record any appropriate journal entries (Hint use the format in Appendix 2A and 20 However, the worksheet is NOT the equivalent of a balance sheet or income statement ) In excel, prepare an income tax provision and prepare the required journal entry(ies) Use the income tax payable account for the tax effect of any retrospective adjustments In excel, prepare a balance sheet, income statement and statement of retained earnings for 2022

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Posted on Oct 22, 2024

Consider the following information.

Marvelous Inc.
Adjusted Trial Balance
31-Dec-22
	(in 000s)	(in 000s)
	DR	CR
Cash	$ 14,250
Accounts Receivable	$ 40,300
Prepaid rent	$ 600
Unexpired insurance policies	$ 4,250
Office supplies	$ 530
Office equipment (purchased 6/30/19)	$ 15,000
Accumulated depreciation: office eqpt		$ 10,500
Accounts payable		$ 5,650
Notes payable		$ 10,000
Unearned rent		$ 5,500
Salaries payable		$ 2,860
Income tax payable		$ 1,230
Common stock		$ 20,000
Retained earnings		$ 10,800
Dividends	$ 1,300
Revenue earned		$ 55,070
Telephone expense	$ 480
Office supply expense	$ 1,500
Depreciation expense: office equipment	$ 3,000
Rent expense	$ 6,700
Officer's life insurance expense	$ 800
Salaries expense	$ 26,000
Miscellaneous expense	$ 3,000
Income taxes expense	$ 3,900
Totals	$ 121,610	$ 121,610

Upon audit of the above 2022 trial balance, you discover the following issues:

The company is using straight line depreciation over 5 years for the office equipment. The useful life should be changed to 7 years with a salvage value of $2,000.
The accrual for employees salary at the end of 2022 should be $2,200 which is the amount the company will have to pay to employees during the first week in January 2023 for work performed during the last week in December.
The controller mistakenly recorded the purchase of $9,000 computer equipment on September 1, 2021, as an expense in 2021. The computer has a 3-year useful life.
On February 21, 2021, the company borrowed $10,000 by signing a 4-year 4% note payable. The note is a balloon loan with all interest and principal due March 1, 2025, compounded annually. No interest was recorded.
A 3-year officers life insurance policy was purchased on April 1, 2020, for $4,250. The full amount was debited to unexpired insurance at the time.
The income tax rate is 25% for all years.

Additional information:

Miscellaneous expense includes a $2,400 penalty for underpayment of tax and $600 of bank fees for insufficient funds during the month of February.
Under MACRS equipment has a 7-year life and computers have a 5-year life.
Unearned rent is all expected to be earned in 2023.

Using Excel record any appropriate journal entries and prepare a balance sheet, income statement and statement of retained earnings.

Required:

In excel, prepare a 10-column worksheet and record any appropriate journal entries. (Hint: use the format in Appendix 2A and 20. However, the worksheet is NOT the equivalent of a balance sheet or income statement.)
In excel, prepare an income tax provision and prepare the required journal entry(ies). Use the income tax payable account for the tax effect of any retrospective adjustments.
In excel, prepare a balance sheet, income statement and statement of retained earnings for 2022.