P4-5 Determining Financial Statement Effects of Adjusting Entries LO4-1 The following information applies to the questions displeyed below Martin Towing Compeny ls at the end of ts accounting year ending December 31. The following data that must be considered were developeo from the company's records and related documents: a. On January 1 of the current year, the company purchased a new hauling van at a cash cost of $28,000. Depreciation estimated at b. During the current year, office supplies amounting to $1,000 were purchased for cash and debited in full to Supplies. At the end of last c. On December 31 of the current year, Lanie's Garage completed repairs on one of the company's trucks at a cost of $2,600; the amount $3,500 for the year has not been recorded for the current year year, the count of supplies remaining on hand was $500, The inventory of supplies counted on hand at the end of the current year was $150. 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 $1,800. The taxes have not been recorded and will be paid in the next year when billed e. On December 31 of the current year, the company completed towing service for an out-of-state company for $4,000 payable by the t On July 1 of the current year, a three-year insurance customer within 30 days. No cash has been collected, and no journal entry has been made for this transaction epaid Insurance on that date. Coverage began on July 1 of the current yeer On October 1 of the premium on equipment in the emount of $900 wes paid and debited in full tro current year, the company borrowed $13,000 from the local bank on a one-year, 12 percent note payeble. The g. principal plus interest is payable at the end of 12 months h. The income before any of the adjustments or income taxes was $30,000. The companty's federal income tax rate is 30 Compute adjusted pre-tax income based on (a) through (a/ to determine income tax expense.) percent (Hint References Section BreakP4-5 Determining Finanda Statement Effects of Adjusting P4-5 Part 1 Required: 1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expens on Accrued expense Accrued expense Accrued expense Accrued expense Accrued revenue Accrued expense Accrued expense Accrued expense b. C. d. e. g. h. References eBook & Resources Worksheet P4-5
