Question
The following information is provided for adjustments prior to closing the books. Conner and Martin ask you to enter the adjustments into the spreadsheet, in
The following information is provided for adjustments prior to closing the books. Conner and Martin ask you to enter the adjustments into the spreadsheet, in the two columns to the right of the unadjusted trial balance. (CM2 uses a perpetual inventory system.)
Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710.
On July 1, a client paid CM2 $205,720 in advance for a year of consulting services.
You discover that a product sale was made and recorded in December for $128,600; the product had not yet been shipped. The cost of the product was $68,742.
Bad debt expense has been calculated to be $17,508 but has not yet been recorded.
The Prepaid Expense account has a balance of $22,774. This balance includes $11,200 for a two-year insurance policy purchased on January 1, 2012.
Depreciation expense for the year is $82,620.
Interest expense accrued on its long-term liabilities is $7,765.
On December 15, CM2 declared a dividend of $110,000, to be paid on January 15, 2013.
Income tax expense is $201,109.
Record Adjusting J/Es and Adjusted Balance with the Journal provided.
| General Ledger Account Name | Unadj. Balance 12/31/12 | 12/31/12 Adjusting J/Es | Adjusted Balance 12/31/12 | ||||||
| Balance Sheet Accounts | Debit | Credit | Debit | JE# | Credit | Debit | Credit | ||
| Cash and cash equivalents | 72,337 | ||||||||
| Accounts Receivable | 910,680 | ||||||||
| Allowance for doubtful accounts | 84,962 | ||||||||
| Inventory | 1,272,160 | ||||||||
| Prepaid expenses | 22,774 | ||||||||
| Other Current Assets | 16,063 | ||||||||
| Building | 874,418 | ||||||||
| Equipment and furniture | 336,983 | ||||||||
| Land | 348,791 | ||||||||
| Accum Depr | 656,465 | ||||||||
| Investments | 140,186 | ||||||||
| Goodwill | 397,740 | ||||||||
| Other intangible assets | 253,900 | ||||||||
| Accounts Payable | 1,169,343 | ||||||||
| Dividends payable | |||||||||
| Interest payable | 5,100 | ||||||||
| Unearned revenue | 205,720 | ||||||||
| Wages payable | 81,350 | ||||||||
| Payroll taxes payable | 8,850 | ||||||||
| Income tax payable | |||||||||
| Long term liabilities | 588,500 | ||||||||
| Common Stock | 920,000 | ||||||||
| Paid-in capital common stock | 105,000 | ||||||||
| Treasury Stock | 400,000 | ||||||||
| Retained Earnings | 0 | ||||||||
| Dividends | |||||||||
| Net Income (Loss) | 681,673 | ||||||||
| 5,046,032 | 4,506,963 |
Journal:
| Wage Expense | 33,875.00 | ||
| Payroll Taxes Expense | 2,710.00 | ||
| Wages Payable | 33,875.00 | ||
| Payroll taxes payable | 2,710.00 | ||
| Unearned Revenue | 102,860.00 | ||
| Service Revenue | 102,860.00 | ||
| Sales Revenue | 128,600.00 | ||
| Inventory | 68,742.00 | ||
| Account Receiveable | 68,742.00 | ||
| Cost of Goods Sold | 128,600.00 | ||
| Bad Debt Expense | 17,508.00 | ||
| Allowance for Doubtful Accounts | 17,508.00 | ||
| Insurance Expense | 5,600.00 | ||
| Prepaid Expense | 5,600.00 | ||
| Depreciation Expense | 82,620.00 | ||
| Accumulated Depreciation | 82,620.00 | ||
| Interest Expense | 7,765.00 | ||
| Interest Payable | 7,765.00 | ||
| Retained Earnings | 110,000.00 | ||
| Dividend Payable | 110,000.00 | ||
| Income Tax Expense | 201,109.00 | ||
| Income Tax Payable | 201,109.00 |
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