Oriole Corporation's balance sheet at December 31, 2021, is presented below. Cash Inventory Prepaid insurance Equipment ORIOLE CORPORATION Balance Sheet December 31, 2021 $30,500 Accounts payable 25,600 Interest payable 5,200 Bonds payable 43,700 Common stock Retained earnings $105,000 $13,700 2,550 51,000 18,100 19,650 $105,000 During 2022, the following transactions occurred. Oriole uses a perpetual inventory system. 1. 2. 3. 4. 5. 6. Oriole paid $2,550 interest on the bonds on January 1, 2022. Oriole purchased $240,400 of inventory on account. Oriole sold for $452,800 cash inventory which cost $248,000. Oriole also collected $27,168 sales taxes. Oriole paid $230,100 on accounts payable. Oriole paid $2,550 interest on the bonds on July 1, 2022. The prepaid insurance ($5,200) expired on July 31. On August 1, Oriole paid $12,000 for insurance coverage from August 1, 2022, through July 31, 2023. Oriole paid $23,600 sales taxes to the state. Paid other operating expenses, $92,900. Redeemed the bonds on December 31, 2022, by paying $48,960 plus $2,550 interest. Issued $92,100 of 8% bonds on December 31, 2022, at 103. The bonds pay interest every June 30 and December 31. 7. 8. 9. 10. 11. Adjustment data: 1. 2. Recorded the insurance expired from item 7. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $2,900 salvage value. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) 3. (a) (To record redemption of bonds) 11. Cash Bonds Payable 92100 Premium on Bonds Payable Prepare the adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter for the amounts.) No. Account Titles and Explanation Debit Credit 1. Insurance Expense Prepaid Insurance 12000 (to adjust insurance expense) 2. Depreciation Expense Accumulated Depreciation Equipment 2900 (to adjust depreciation expense) 3. Income Tax Expense Income Taxes Payable (to adjust income tax expense) no entry is required, select "No entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit 1. Insurance Expense 5200 Prepaid Insurance 5200 (to adjust insurance expense) 2. Depreciation Expense 8160 Accumulated Depreciation-Equipment 8160 (to adjust depreciation expense) 3. Income Tax Expense 28032 Income Taxes Payable 28032 (to adjust income tax expense) Tauthaal and Media