Someone please help me on adjusting journal entrynumbers 6, 7, and 12. I have to have thisdone ASAP and I'm not understanding it.

Read ALL instructions before getting started! ABC Corporation is a new company that buys and sells office supplies. Business began on January 1, 2015. Given on the first two tabs are ABC's 12/31/15 Unadjusted Trial Balance and a list of needed adjustments. 1. Make all 12 adjustments on the "Adjusting Journal Entries" tab. Remember to include a description under each journal entry. 2. Post the adjustments to the general ledger on the "12-31-15 T-Accounts" tab. You may have to add T-Accounts for new accounts. Link your T-Account entries to your Journal Entries. PLEASE NOTE THAT THE "BB" (BEGINNING BALANCES) FOR THE T-ACCOUNTS REPRESENT THE BALANCES AS OF 12/31/15. 3. Once the 12/31/15 T-Accounts are complete, prepare the Adjusted Trial Balance. There may be some accounts with zero dollars, and you may have to insert lines for new accounts. Link the Adjusted Trial Balance to your T-Accounts. 4. Use the Adjusted Trial Balance numbers to complete the Income Statement, Statement of Retained Earnings, and Balance Sheet. For purposes of the Income Statement, prepare using the multiple step format and assume that Rent Revenue, any Unrealized Holding Gains/Losses, Interest Expense, Interest Revenue, and any other Gains/Losses are NOT part of the major central ongoing operations of the company. For purposes of the Balance Sheet, be sure to prepare a classifed Balance Sheet. Link your financial statements to your Adjusted Trial Balance. If necessary, review financial statement preparation in Chapters 4 and 5 of your textbook for a quick refresher. 5. When the Financial Statements are complete, make the closing entries on the "Closing Entries" tab. 6. When closing entries have been made, post the entries to the general ledger on the "Post-Close T-Accounts" tab. Make sure your adjusting journal entries are also on your Post-Close T-Accounts. They will not automatically flow from tab-to-tab. (Helpful hint: After you have completed and posted all of your adjusting entries, make a duplicate copy of your "12-31-15 T-Accounts" tab to replace the existing blank "Post-Close T Accounts" tab by right clicking on the completed "12-31-15 T-Accounts" tab, select Move or Copy, then click on "Create a Copy" and then place at the desired location. You can then delete the original "Post-Close T-Accounts" tab and rename the newly duplicated tab as your "Post-Close T-Accounts" tab). 7. The final step is the Post-Closing Trial Balance, which will use the ending balances from the Post-Close T-Accounts. 8. Double-check your work. Here are a few things to check for: -Adjusted Trial Balance: Make sure debit column and credit column total to the same figure at the bottom. -Net income from the income statement will flow through to the Statement of Retained Earnings. -Ending Retained Earnings from the Statement of Retained Earnings will flow through to the Balance Sheet. -The Post-Closing Trial Balance should not have any revenue, expense, gain, or loss (temporary) accounts. -Check figure 1: Gross profit = $573,000. -Check figure 2: Income before income taxes = $345,266. -Check figure 3: Total Liabilities and Stockholders' Equity = $1,298,480. -Check figure 4: Adjusted Trial Balance debit and credit columns total $2,010,321. -Check figure 5: Total Current Assets = $1,145,045. -Remember: Neatness matters in Financial Statements. Print or Print Preview before submitting to make sure your statements are neat. Otherwise, management may send back to you for revision! -Include your work at the bottom of each tab as needed. -Ask questions prior to the dayight before the due date. The due date is clearly indicated on the course schedule. -Utilize formulas and worksheet linkings in your financial statements to improve accuracy and save time in completing the assignment. -Please take advantage of Excel by using formulas to calculate groups of numbers (i.e. "Total Liabilities and Stockholders' Equity"). -DO NOT force any cells to match check figures given. Any adjustments in the T-Accounts or financial statements not supported by legitimate adjusting or closing entries will be considered financial statement misrepresentation sufficient to result in a failing grade. roject is intended to make sure that you understand the accounting cycle as well as several key financial accounting transactions that you have ediate Accounting series. It is very important to take the necessary time on this project to master these concepts. The concepts mastered in this comprehensive problem will serve you well in the rest of your accounting curriculum. ABC Corporation Unadjusted Trial Balance December 31, 2015 Debit 707,650 357,120 Cash Accounts receivable Allowance for doubtful accounts Inventory Allowance to Reduce Inventory to Market Value 267,000 Purchases 8,250 Prepaid insurance 88,000 Land 37,500 Building Accumulated depreciation: building 21,600 Equipment Accumulated depreciation: equipment 20,000 Patent Accounts payable Notes payable Income taxes payable Unearned rent revenue Bonds Payable 51,520 Discount on Bonds Payable Common stock PIC In Excess of Par-Common Stock Retained earnings 20,000 Treasury stock 28,000 Dividends Sales Revenue 9,240 Advertising expense 62,150 Wages expense 14,370 Office expense 10,150 Depreciation expense 33,600 Utilities expense 24,750 Insurance expense 88,000 Income taxes expense $ 1,848,900 $ Credit - 1,150 9,000 40,750 40,000 88,000 15,000 700,000 125,000 40,000 790,000 1,848,900 1 On March 1, ABC purchased a one-year liability insurance policy for $33,000. Upon purchase, the following journal entry was made: Dr Prepaid insurance 33,000 Cr Cash 33,000 The expired portion of insurance must be recorded as of 12/31/15. Notice that the expired portion from March through November has been recorded already. Make sure that the Prepaid Insurance balance after the adjusting entry is correct. 2 Depreciation expense must be recorded for the month of December. The building was purchased on February 1, 2015 for $37,500 with a remaining useful life of 25 years and a salvage value of $3,000. The method of depreciation for the building is straight-line. The equipment was purchased on February 1, 2015 for $21,600 with a remaining useful life of 4 years and a salvage value of $1,800. The method of depreciation for the equipment is double-declining balance. Depreciation has been recorded for the building and equipment for months February through November. 3 On December 1, XYZ Co. agreed to rent space in ABC's building for $5,000 per month, and XYZ paid ABC on December 1 in advance for the first three months' rent. The entry made on December 1 was as follows: Dr Cash 15,000 Cr Unearned rent revenue 15,000 The unearned revenue account must be adjusted to reflect the amount earned as of 12/31/15. 4 Per timecards, from the last payroll date through December 31, 2015, ABC's employees have worked a total of 275 hours. Including payroll taxes, ABC's wage expense averages about $21 per hour. The next payroll date is January 5, 2016. The liability for wages payable must be recorded as of 12/31/15. 5 On November 30, 2015, ABC borrowed $40,000 from American National Bank by issuing an interest-bearing note payable. This loan is to be repaid in three months (on February 28, 2016), along with interest computed at an annual rate of 9%. The entry made on November 30 to record the borrowing was: Dr Cash 40,000 Cr Notes payable 40,000 On February 28, 2016 ABC must pay the bank the amount borrowed plus interest. Assume the beginning balance for Notes Payable is correct. Interest through 12/31/15 must be accrued on the $40,000 note. 6 ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete physical inventory at year-end. A physical count was taken on December 31, 2015, and the inventory on-hand at that time totaled $50,000, which reflects historical cost. A review of inventory data further indicated that current replacement value of the ending inventory is $45,000, the retail sales value of the ending inventory is $182,000, estimated cost of completion and disposal is 72.5% of retail, and normal profit margin is 1.25% of retail value. Record the adjusting entry for properly recognizing 2015 Cost of Goods Sold. Additionally, ABC adheres to GAAP by recording ending inventory at the lower of cost or market at a total inventory level. Be sure to make an additional adjustment, if necessary, to properly value ending inventory using the Loss and Allowance methodology. 7 It would be unusual for a company to have an asset impairment in Year 1, but for the sake of this example, ABC realized that their intangible asset might be impaired on December 31, 2015. Record the impairment if any. The expected future undiscounted net cash flows for this intangible asset totals $15,000, and the fair value of the asset is $17,500. 8 On 7/1/15, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasury stock was $5 per share, or $20,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/15, ABC reissued 2,000 shares of the treasury stock at $8 per share. Record the journal entry required for the reissuance of the treasury stock. 9 On 12/31/15, ABC issued 9,000 shares of $3 par value common stock at the closing market price of $4 per share. Prepare ABC's journal entry to reflect the issuance of the stock on 12/31/15. 10 On 7/1/15, ABC sold 10% bonds having a maturity value of $700,000 for $648,480, resulting in an effective yield of 12%. The bonds are dated 7/1/15, and mature 7/1/20. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount. Record the adjusting entry for the accrual of interest and the related amortization on 12/31/15. Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense. 11 ABC Corporation prepares an aging schedule on 12/31/15 that estimates total uncollectible accounts at $25,000. Assuming that the allowance met prepare the entry to record bad debt expense. Do this step after preparing the Income Statement except for the Income taxes line: 12 Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15. However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full on the return's March 15, 2016 due date. ABC's income tax rate is 40%. The entire year's income tax expense was estimated at the beginning of 2015 to be $96,000, so January through November income tax expense recognized amounts to $88,000 (11/12 months). Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents income tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities. Based on the income before income taxes figure from the income statement, record December's income tax expense so that the entire year's tax expense is correct (i.e. the difference between total income tax expense and the amount already accrued through Nov Adjusting Journal Entries 12/31/15 JE # Account Titles Debits Credits 1 Insurance Expense Prepaid Insurance *Expired portion of prepaid insurance for December 33,000*1/12 2,750 2 Depreciation Expense-Building Accumulated Depreciation Expense-Building *Depreciaiton expense for building during December ((37500-3000)/25)/12 115 Depreciation Expense-Equipment Accumulated Depreciation Expense-Equipment *Depreciation expense for equipment during December ((21600/4)/12)*2 2,750 115 900 900 3 Unearned Rent Revenue Rent Revenue *Amount of rent revenue earned as of December 31, 2015. 15000/3 5,000 4 Wages Expense Outstanding Expense *Wages recognized for the month of December 275*21 5,775 5 Interest Expense Interest Payable *Interest on notes payable recognized (40000*9%)/12 6 Inventory (Ending) Cost of Goods Sold (Balancing Figure) Inventory (Beginning) Purchases *Recognized 2015 Cost of Goods Sold Inventory (Ending)=182000-182000(72.5%)=50050-182000(1.25%)=47775 7 Impairment Loss on Patent Patent *Patent being reduced from book value to fair value 15000-17500=-2500=0 5,000 5,775 300 300 47,775 219,225 0 267,000 0 0 8 Cash (2000*8) Treasury Stock Additional Paid-In Capital *Reissuance of Treasury Stock (2000*5) 16,000 9 Cash Common Stock Additional Paid-In Capital *Issuance of Common Stock Cash=9000*4; Common Stock=9000*3 36,000 10,000 6,000 27,000 9,000 10 Interest Expense Discount on Bond Payable Cash *Accrual of Interest and the related amortization on 12/31/15 Interest Expense: 648,480*6%; Discount: 38,909-35,000 38,909 11 Bad Debt Expense Allowance for Doubtfull Accounts *Recording of Bad Debt Expense 25,000 12 Income Tax Expense Cash *Recording of Income Tax Expense for the month of Dec. 3,909 35,000 25,000 564,800 564,800 Beginning balances (bb) on these T-accounts are the 12/31/15 unadjusted balances. Hint: If there is no beginning balance (bb), it is a new account. Cash bb 707,650 16,000 Accounts receivable 35,000 564,800 bb Inventory bb 357,120 47,775 Purchases - bb 267,000 Prepaid insurance 267,000 bb 8,250 Land 2,750 bb 88,000 36,000 159,850 357,120 5,000 - 5,500 Allowance to Reduce Inventory to Market Value - bb Allowance for doubtful accounts 25,000 bb 88,000 Bonds Payable 700,000 bb bb Discount on Bonds Payable 51,520 3,909 700,000 25,000 bb Accumulated depreciation: building 1,150 bb Building 37,500 bb - Accumulated depreciation: equipment 9,000 bb Equipment 21,600 115 37,500 21,600 Income taxes payable 88,000 bb 40,000 bb bb Patent 20,000 Accounts payable 40,750 bb - 900 1,265 Notes payable 47,611 9,900 Unearned rent revenue 5,000 15,000 bb 20,000 Common stock 40,750 Retained earnings 125,000 bb - bb bb PIC In Excess of Par-Common Stock 40,000 bb Dividends 28,000 27,000 9,000 40,000 88,000 Sales Revenue 10,000 Advertising expense 790,000 bb bb Wages expense bb 9,240 152,000 Office expense bb 62,150 5,775 28,000 - Depreciation expense bb 14,370 10,150 115 49,000 Utilities expense bb Treasury stock bb 33,600 20,000 10,000 900 790,000 9,240 67,925 14,370 11,165 33,600 10,000 These additional T-acccounts are provided for your use as necessary when making the adjusting entries. Be sure to insert sum formulas as needed depending on nature of account. You can use the sum formulas as supplied on existing T-accounts abo bb Insurance expense 24,750 bb Income taxes expense 88,000 2,750 Outstanding Expense 5,000 652,800 5,775 564,800 27,500 Rent Revenue Impairment Loss on Patent Interest Expense 300 Interest Payable 300 COGS 219,225 300 219,225 38,909 5,000 PIC In Excess of Treasury Stock Bad Debt Expense - 6,000 25,000 - 6,000 25,000 5,775 39,209 ABC Corporation Adjusted Trial Balance December 31, 2015 Debit 159,850 357,120 Cash $ Accounts receivable Allowance for doubtful accounts Inventory Allowance to Reduce Inventory to Market Value Purchases Prepaid insurance 5,500 Land 88,000 Building 37,500 Accumulated depreciation: building $ Equipment 21,600 Accumulated depreciation: equipment Patent 20,000 Accounts payable Notes payable Income taxes payable Unearned rent revenue Bonds Payable Discount on Bonds Payable 47,611 Common stock PIC In Excess of Par-Common Stock Retained earnings Treasury stock 10,000 Dividends 28,000 Sales Revenue Advertising expense 9,240 Wages expense 67,925 Office expense 14,370 Depreciation expense 11,165 Utilities expense 33,600 Insurance expense 27,500 Income taxes expense 652,800 Rent Revenue Outstanding Expense Interest Expense 39,209 Interest Payable Cost of Goods Sold 219,225 Impairment Loss on Patent PIC In Excess of Par-Treasury Stock Bad Debt Expense 25,000 $ Credit 25,000 5,000 - 1,265 9,900 40,750 40,000 88,000 10,000 700,000 152,000 49,000 - 790,000 5,000 5,775 300 6,000 1,875,215 $ 1,927,990 ABC Corporation Income Statement For the Year Ended December 31, 2015 Cash ### Sales 790000 Gross Profit $ Operating Expenses: Cost of Goods Sold Advertising Expense Wages Expense Office Expense Depreciation Expense Utilities Expense Insurance Expense Income Taxes Expense Other Income and Loss: Rent Revenue Impairment Loss on Patent Income before Income Taxes Income Taxes at 40% Net Income 949,850 9,240 67,925 14,370 11,165 33,600 27,500 652,800 $ $ 5,000 5,000 5,000 96,000 (91,000) ABC Corporation Statement of Retained Earnings For the Year Ended December 31, 2015 ABC Corporation Balance Sheet For the Year Ended December 31, 2015 12/31/15 JE # Closing Entries Account Titles Debits Credits Beginning balances (bb) on these T-accounts are the 12/31/15 unadjusted balances. Hint: If there is no beginning balance (bb), it is a new account. Cash bb Accounts receivable bb 707,650 707,650 Inventory bb 357,120 357,120 Purchases bb - - Prepaid insurance bb 267,000 267,000 8,250 Allowance to Reduce Inventory to Market Value - bb Allowance for doubtful accounts - bb Land bb 8,250 88,000 88,000 Bonds Payable 700,000 bb bb Discount on Bonds Payable 51,520 700,000 - bb Accumulated depreciation: building 1,150 bb Building 37,500 37,500 bb 1,150 Notes payable Accumulated depreciation: equipment 9,000 bb Equipment 21,600 21,600 Income taxes payable 88,000 bb 40,000 bb - 51,520 bb 9,000 Unearned rent revenue 15,000 bb Patent 20,000 Accounts payable 40,750 bb 20,000 Common stock 40,750 Retained earnings 125,000 bb - bb bb PIC In Excess of Par-Common Stock 40,000 bb Dividends 28,000 40,000 88,000 Sales Revenue 15,000 Advertising expense 790,000 bb bb 790,000 9,240 9,240 125,000 Wages expense bb 62,150 62,150 Office expense bb 14,370 14,370 28,000 - Depreciation expense bb 10,150 10,150 40,000 Utilities expense bb 33,600 33,600 Treasury stock bb 20,000 20,000 These additional T-acccounts are provided for your use as necessary when making the adjusting entries. Be sure to insert sum formulas as needed depending on nature of account. You can use the sum formulas as supplied on existing T-accounts abo bb Insurance expense 24,750 24,750 bb Income taxes expense 88,000 88,000 ABC Corporation Post-Closing Trial Balance December 31, 2015 Debit $ - Credit $ - Grading Rubric for AC322 Comprehensive Problem Adjusting Entries 1 2 3 4 5 6 7 8 9 10 11 12 Adjusted Trial Balance Correct totals (based on formula) Totals balance Points Possible 8 8 8 8 8 8 8 8 8 8 8 8 96 Points Possible 8 8 16 Income Statement Points Possible Correct Format 8 Correct Income Before Income Taxes (based on formula) 8 Correct Gross Profit (based on formula) 8 Correct Income Tax Expense 8 Components Sum to Net Income 8 40 Balance Sheet Correct Form Assets=Liabilities+Stockholders Equity Correct Totals for Assets, Liab, & Equity Components Sum Correctly Statement of Retained Earnings Correct Form Correct Ending Retained Earnings Closing Entries 1 2 3 4 After-Closing Trial Balance Correct totals (based on formula) Totals balance Total Grade Points Earned 0 Points Earned 0 Points Earned 0 Points Possible 8 8 10 8 34 Points Earned Points Possible 8 8 16 Points Earned 0 0 Points Possible 8 8 8 8 32 Points Earned Points Possible 8 8 16 Points Earned 250 0 0 0