Novak Corp.'s balance sheet at December 31, 2019, is presented below. Cash Inventory Prepaid insurance Equipment Novak Corp. Balance Sheet December 31, 2019 $31,500 Accounts payable 30,500 Interest payable 6,480 Bonds payable 39,420 Common stock Retained earnings $107,900 $12,950 2,350 47,000 27,100 18,500 $107,900 During 2020, the following transactions occurred. 1. 2. 3. 4. 5. 6. Novak paid $2,350 interest on the bonds on January 1, 2020. Novak purchased $240,200 of inventory on account. Novak sold for $481,500 cash inventory which cost $260,000. Novak also collected $33,705 sales taxes. Novak paid $226,500 on accounts payable. Novak paid $2,350 interest on the bonds on July 1, 2020. The prepaid insurance ($6,480) expired on July 31. On August 1, Novak paid $12,000 for insurance coverage from August 1, 2020, through July 31, 2021. Novak paid $23,600 sales taxes to the state. Paid other operating expenses, $90,300. Retired the bonds on December 31, 2020, by paying $44,000 plus $2,350 interest. Issued $90,500 of 8% bonds on December 31, 2020, at 104. The bonds pay interest every December 31. 7. 8. 9. 10. 11. Adjustment data: 1. Recorded the insurance expired from item 7. 2. The equipment was acquired on December 31, 2019, and will be depreciated on a straight-line basis over 5 years with a $3,060 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.) (b) Prepare an adjusted trial balance at December 31, 2020. Novak Corp. Trial Balance bit Credit For the Year Ended 12/31/2020 For the Month Ended 12/31/2020 12/31/2020 $ Totals Attempts: 0 of 1 used