Adjustments On March 31, you notice the following: a) You have $44 worth of supplies on hand b) You need to recognize depreciation on the building c) You need to recognize interest accumulated on the 2 bank loans (do as one entry) d) You need to recognize insurance used e) You need to recognize depreciation on the kite making machine f) You have accrued salaries of $477 g) You need to recognize/accrue federal income taxes of 25%. Round to the nearest dollar if needed. Hint: compute adjusted income based on all preceding information, and then determine and record income tax expense. al 1. Karla's Kurvy Kite's Transactions January 1: Stockholder's invest $156,050 into the company in exchange for Billy Bob's Bikes common stock 2. January 1: Karla C. bought some land in her hometown for $51.666. January 1: Karla C. purchased a building for $323,575 using $23.575 cash and then borrowing the rest from the bank. The loan from the bank will be paid off over the next 24 years (1/24 of the principal will be paid off at the end of each year). The loan carries an interest rate of 8.88% Interest accrued will be paid off at the end of every year. The building has an expected life of 55 years, a salvage value of $269,455, and will be depreciated using the straight-line method. 4. January 1: Karla C. paid in advance for a 10-month insurance policy, which will begin today. She paid $4,680 cash for the policy. S. January 7: Karla C. purchased 175 kites from Kite's of Bargains. Each kite cost $5.60 and the credit terms are 5/15, 1/30. (Note: Kites are considered Inventory) 6. January 8: Kite's of Bargains paid FedEx S27 cash to ship the kites to Karla C. 7. January 13: Karla C. purchased S179 worth of supplies from Dirt Cheap Supplies paying cash. 8 January 17: Karla C, sold 102 kites to Super Kite's for $22.50 each with credit terms of 2/10. n/30. The total cost of the kites was figured out to be $571. 9. January 18: Karla C. paid UPS 533 cash to ship the kites to Super Kite's. 10. January 21: Karla C. paid off the balance due from Kite's of Brains Ianuary 24: Super Kite's returned ten of the Kites because they were tom. The cost of the kitesto Karla C. was figured out to be 556. 12 February 1: Karla C. purchased 757 more kites from Kite's of Bargains. Each kite cost $6 and the credit terms are SVIO EOM, 190. 13. February 1: Karla C. paid UPS 554 cash to ship the kites she bought from Kite's of Bargains. 14 February 1: Karla C. bought a Kite Making Machine for $49,500 using $4,500 cash and then borrowing the rest from the bank. The loan will be paid off over the next 6 years (1/6 of the principal will be paid at the end of each year). The loan carries an interest rate of 7.20 percent Interest accrued will be paid off at the end of every year. The Kite Making Machine has an expected life of 10 years, no salvage value and will be depreciated using the straight-line method. 15. February 6: Karla Creturned 17 of the kites she bought from Kite's of Bargains. They credited SIO2 to her account 16 February 12: Super Kite's paid their balance off for the kites they purchased 17. February 19: Karla C's pay period ends and she now owes her employees $656 in salaries. These salaries will be paid on March 5. 18. February 22: Karla's Kurvy Kite's paid cash dividends of $175. 19. February 25: Karla C. hires Karl Kiter for promotional purposes. She estimates his salary to be S10/hour. He will probably work 8 hours a week. 20. February 28: Karla C. sold 800 kites to Big Flying Kites for $27 each with credit terms of 3/20. n/60. The cost of the kites was determined to be $4,607. 21. February 28: Big Flying Kites paid FedEx $144 to ship the kites they just bought 22. March 5: Karla C. paid her employees the $656 in salaries owed. 23. March 8: Karla C. paid a utilities bill in the amount of $576. 24. March 9: Karla C. paid off the balance due from Kite's of Bargains. 25. March 15: Big Flying Kites paid their balance of for the kites they purchased 26 March 22: Karla C. purchased 1.864 kites from Kites R' Us. Each kite cost $6.25 and the credit terms are 1/10 EOM, 1/90 27. March 23: Karla C. paid FedEx S180 to have the kites shipped to her 28. March 28: Karla C. sells 1,580 kites to The Kite Surplus Store for $31.75 each with credit terms of 3/10, 1/30. The cost of the kites was determined to be $10.011. 29. March 29: Karla C. paid FedEx S202 to ship the kites to The Kite Surplus Store - Karla's Adjustments On March 31, you notice the following: a) You have $44 worth of supplies on hand b) You need to recognize depreciation on the building c) You need to recognize interest accumulated on the 2 bank loans (do as one entry) d) You need to recognize insurance used e) You need to recognize depreciation on the kite making machine f) You have accrued salaries of $477 g) You need to recognize/accrue federal income taxes of 25%. Round to the nearest dollar if needed. Hint: compute adjusted income based on all preceding information, and then determine and record income tax expense. al 1. Karla's Kurvy Kite's Transactions January 1: Stockholder's invest $156,050 into the company in exchange for Billy Bob's Bikes common stock 2. January 1: Karla C. bought some land in her hometown for $51.666. January 1: Karla C. purchased a building for $323,575 using $23.575 cash and then borrowing the rest from the bank. The loan from the bank will be paid off over the next 24 years (1/24 of the principal will be paid off at the end of each year). The loan carries an interest rate of 8.88% Interest accrued will be paid off at the end of every year. The building has an expected life of 55 years, a salvage value of $269,455, and will be depreciated using the straight-line method. 4. January 1: Karla C. paid in advance for a 10-month insurance policy, which will begin today. She paid $4,680 cash for the policy. S. January 7: Karla C. purchased 175 kites from Kite's of Bargains. Each kite cost $5.60 and the credit terms are 5/15, 1/30. (Note: Kites are considered Inventory) 6. January 8: Kite's of Bargains paid FedEx S27 cash to ship the kites to Karla C. 7. January 13: Karla C. purchased S179 worth of supplies from Dirt Cheap Supplies paying cash. 8 January 17: Karla C, sold 102 kites to Super Kite's for $22.50 each with credit terms of 2/10. n/30. The total cost of the kites was figured out to be $571. 9. January 18: Karla C. paid UPS 533 cash to ship the kites to Super Kite's. 10. January 21: Karla C. paid off the balance due from Kite's of Brains Ianuary 24: Super Kite's returned ten of the Kites because they were tom. The cost of the kitesto Karla C. was figured out to be 556. 12 February 1: Karla C. purchased 757 more kites from Kite's of Bargains. Each kite cost $6 and the credit terms are SVIO EOM, 190. 13. February 1: Karla C. paid UPS 554 cash to ship the kites she bought from Kite's of Bargains. 14 February 1: Karla C. bought a Kite Making Machine for $49,500 using $4,500 cash and then borrowing the rest from the bank. The loan will be paid off over the next 6 years (1/6 of the principal will be paid at the end of each year). The loan carries an interest rate of 7.20 percent Interest accrued will be paid off at the end of every year. The Kite Making Machine has an expected life of 10 years, no salvage value and will be depreciated using the straight-line method. 15. February 6: Karla Creturned 17 of the kites she bought from Kite's of Bargains. They credited SIO2 to her account 16 February 12: Super Kite's paid their balance off for the kites they purchased 17. February 19: Karla C's pay period ends and she now owes her employees $656 in salaries. These salaries will be paid on March 5. 18. February 22: Karla's Kurvy Kite's paid cash dividends of $175. 19. February 25: Karla C. hires Karl Kiter for promotional purposes. She estimates his salary to be S10/hour. He will probably work 8 hours a week. 20. February 28: Karla C. sold 800 kites to Big Flying Kites for $27 each with credit terms of 3/20. n/60. The cost of the kites was determined to be $4,607. 21. February 28: Big Flying Kites paid FedEx $144 to ship the kites they just bought 22. March 5: Karla C. paid her employees the $656 in salaries owed. 23. March 8: Karla C. paid a utilities bill in the amount of $576. 24. March 9: Karla C. paid off the balance due from Kite's of Bargains. 25. March 15: Big Flying Kites paid their balance of for the kites they purchased 26 March 22: Karla C. purchased 1.864 kites from Kites R' Us. Each kite cost $6.25 and the credit terms are 1/10 EOM, 1/90 27. March 23: Karla C. paid FedEx S180 to have the kites shipped to her 28. March 28: Karla C. sells 1,580 kites to The Kite Surplus Store for $31.75 each with credit terms of 3/10, 1/30. The cost of the kites was determined to be $10.011. 29. March 29: Karla C. paid FedEx S202 to ship the kites to The Kite Surplus Store - Karla's
