Question
Sunland Corporations balance sheet at December 31, 2021, is presented below. SUNLAND CORPORATION Balance Sheet December 31, 2021 Cash $31,500 Accounts payable $13,200 Inventory 28,100
Sunland Corporations balance sheet at December 31, 2021, is presented below.
SUNLAND CORPORATION Balance Sheet December 31, 2021 | ||||||
---|---|---|---|---|---|---|
Cash | $31,500 | Accounts payable | $13,200 | |||
Inventory | 28,100 | Interest payable | 2,300 | |||
Prepaid insurance | 5,400 | Bonds payable | 46,000 | |||
Equipment | 42,800 | Common stock | 18,100 | |||
Retained earnings | 28,200 | |||||
$107,800 | $107,800 |
During 2022, the following transactions occurred. Sunland uses a perpetual inventory system.
1. | Sunland paid $2,300 interest on the bonds on January 1, 2022. | |
2. | Sunland purchased $243,200 of inventory on account. | |
3. | Sunland sold for $447,500 cash inventory which cost $250,500. Sunland also collected $26,850 sales taxes. | |
4. | Sunland paid $229,700 on accounts payable. | |
5. | Sunland paid $2,300 interest on the bonds on July 1, 2022. | |
6. | The prepaid insurance ($5,400) expired on July 31. | |
7. | On August 1, Sunland paid $13,200 for insurance coverage from August 1, 2022, through July 31, 2023. | |
8. | Sunland paid $25,000 sales taxes to the state. | |
9. | Paid other operating expenses, $91,000. | |
10. | Redeemed the bonds on December 31, 2022, by paying $44,160 plus $2,300 interest. | |
11. | Issued $91,400 of 8% bonds on December 31, 2022, at 103. The bonds pay interest every June 30 and December 31. |
Adjustment data:
1. | Recorded the insurance expired from item 7. | |
2. | The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $3,200 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.) |
Prepare journal entries for the transactions listed above. (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 0 for the amounts.)
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 0 for the amounts.)
Prepare an adjusted trial balance at December 31, 2022.
Prepare an income statement for the year ending December 31, 2022.
I am particularly comnfused on the income statement. Please show your work, Thank you.
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