Requirement #4: Prepare adjusting entries using the following information in the General Journal below. Show your calculations! a) One month's insurance has expired. b) The remaining inventory of supplies is $400. c) The estimated depreciation on equipment is $125. d) The estimated income taxes are $3,000. Debit Credit Date a General Journal Description (Account Name) Insurance expense Prepaid insurance 350 350 Supplies expense Supplies 400 400 125 Depreciation Accumulated Depreciation 125 3,000 Income tax Income tax payable 3,000 Requirement #5: Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances. Just add to the balances that are already listed. Requirement #1: During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash dividends of $600. 1 Requirement #7: 3 Prepare the financial statements for the Quick Tax Corporation as of July 31 in the space below. 4 You will only be preparing the income statement, statement of retained earnings, and the balance sheet. 5 The statement of cash flows is a required financial statement, but is not required for this case study. 6 7 Quick Tax Corporation Quick Tax Corporation Quick Tax Corporation 8 Income Statement Statement of Retained Earnings Balance Sheet 9 For the Month Ending July 31 For the Month Ending July 31 July 31 10 11 Revenues: Retained Earnings, July 1 Assets: 12 Revenue 17,000 Add: Net Income Cash 13 Subtotal Supplies 14 Expenses: Less: Dividends 600 Prepaid Insurance 15 Rent Expense 3,500 Retained Earnings, July 31 Equipment 16 Salaries Expense 3,500 Less: Accum. Depr. 17 Insurance Expense 350 Total Assets 18 Supplies Expense 400 19 Depreciation Expense 125 Liabilities: 20 Income Tax Expense Accounts Payable 21 Total Expenses Income Tax Payable 22 Total Liabilities 23 Net Income $ 5,925 Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 3,000
