Trevor Corporation's balance sheet at December 31, 2013, is presented below:

Cash-30,000 Accounts Payable - 13,750

Inventory-30,750 Interest Payable - 2,500

Prepaid Insurance- 5,600 Bonds Payable - 50,000

Equipment- 38,000 Common Stock- 25,000

------------------------ Retained earnings - 13,100

104,350 104,350

During 2014, the following transactions occured.

1. Trevor paid $2,500 interest on bonds on January 1, 2014

2. Trevor purchased $241, 100 in inventory on account

3. Trevor sold for $480,000 cash inventory which cost $265,000. Trevor also collected $28,800 sales tax.

4. Trevor paid $230,000 on accounts payable.

5. Trevor paid $2,500 interest on the bonds on July 1, 2014.

6. The prepaid insurance ($5,600) expired on July 31.

7. On August 1, Trevor paid $10,200 for insurance coverage from August 1, 2014, through July 31, 2015.

8. Trevor paid $17,000 sales tax on the state.

9. Paid other operating expenses, $91,000.

10. Redeemed the bonds on December 31, 2014, by paying $48,000 plus $2,500 interest.

11. Issued $90,000 of 8% bonds on December 31, 2014, 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, 2013, and will be depreciated on a straight-line basis over 5 years with a $3,000 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)

Instructions:

A) PREPARE JOURNAL ENTRIES FOR THE TRANSACTIONS LISTED ABOVE AND ADJSUTING ENTRIES.

B) PREPARE AN ADJUSTED TRIAL BALANCE AT DECEMBER 31, 2014.

C) PREPARE AN INCOME STATEMENT AND A RETAINED EARNINGS STATEMENT FOR THE YEAR ENDING DECEMBER 31,2014, AND A CLASSIFIED BALANCE SHEET AS OF DECEMBER 31, 2014.

(Please help me to answer A, B, and C)

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