Martin Towing Company is at the end of its accounting year ending December 31 The following data that must be considered were developed from the company's records and related documents On January 1 of the current year, the company purchased a new hauling van at a cash cost of $23,800 Depreciation estimated at $3,000 for the year has not been recorded for the current year During the current year, office supplies amounting to $890 were purchased for cash and debited in full to Supplies At the end of last year, the count of supplies remaining on hand was $400 The inventory of supplies counted on hand at the end of the current year was $300 On December 31 of the current year, Lanie's Garage completed repairs on one of the company's trucks at a cost of $1,080 the amount is not yet recorded by Martin and by agreement will be paid during January of next year On December 31 of the current year, property taxes on land owned during the current year were estimated at $1,340 The taxes have not been recorded and will be paid in the next year when billed On December 31 of the current year, the company completed towing service for an out of state company for $6,900 payable by the customer within 30 days No cash has been collected, and no journal entry has been made for this transaction On July 1 of the current year, a three year insurance premium on equipment in the amount of $660 was paid and debited in full to Prepaid Insurance on that date Coverage began on July 1 of the current year On October 1 of the current year, the company borrowed $10,800 from the local bank on a one year, 12 percent note payable The principal plus interest is payable at the end of 12 months The income before any of the adjustments or income taxes was $40,000 The company's federal income tax rate is 30 percent ( Hint Compute adjusted pre tax income based on ( a) through ( g) to determine income tax expense ) Required 1 Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense 2 Prepare the adjusting entry required for each transaction at December 31 of the current year (If no entry is required for a transaction event, select No journal entry required in the first account field Round your final answers to nearest whole dollar value)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

Martin Towing Company is at the end of its accounting year ending December 31. The following data that must be considered were developed from the

Martin Towing Company is at the end of its accounting year ending December 31. The following data that must be considered were developed from the company's records and related documents:

On January 1 of the current year, the company purchased a new hauling van at a cash cost of $23,800. Depreciation estimated at $3,000 for the year has not been recorded for the current year.
During the current year, office supplies amounting to $890 were purchased for cash and debited in full to Supplies. At the end of last year, the count of supplies remaining on hand was $400. The inventory of supplies counted on hand at the end of the current year was $300.
On December 31 of the current year, Lanie's Garage completed repairs on one of the company's trucks at a cost of $1,080; the amount is not yet recorded by Martin and by agreement will be paid during January of next year.
On December 31 of the current year, property taxes on land owned during the current year were estimated at $1,340. The taxes have not been recorded and will be paid in the next year when billed.
On December 31 of the current year, the company completed towing service for an out-of-state company for $6,900 payable by the customer within 30 days. No cash has been collected, and no journal entry has been made for this transaction.
On July 1 of the current year, a three-year insurance premium on equipment in the amount of $660 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1 of the current year.
On October 1 of the current year, the company borrowed $10,800 from the local bank on a one-year, 12 percent note payable. The principal plus interest is payable at the end of 12 months.
The income before any of the adjustments or income taxes was $40,000. The company's federal income tax rate is 30 percent. (Hint: Compute adjusted pre-tax income based on (a) through (g) to determine income tax expense.)

Required:

1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense.

2. Prepare the adjusting entry required for each transaction at December 31 of the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar value)