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Vicit Corp. manufactures steel parts for companies in the automotive and aeronautic industry. It makes all sales of its inventory on credit (i.e. all sales

Vicit Corp. manufactures steel parts for companies in the automotive and aeronautic industry. It makes all sales of its inventory on credit (i.e. all sales revenue is derived from credit sales), extending cash discounts with terms 2/10, n/30 and opportunities for sales returns within a 30-day window from the point of delivery. Vicit uses the gross method to account for cash discounts and the balance sheet method to account for its bad debt expense arising from uncollectible accounts.

Vicit uses straight-line methods to allocate costs for both its fixed and intangible assets. Factories are assigned a 30-year useful life, equipment a 5-year useful life and its patents have a 7-year useful life. The company anticipates no salvage on any of its long-term operating assets.

During 2021, Vicit decided to discontinue a component of its operations and successfully sold it in December. It attributes 10% of its total operating income to the discontinued component in determining the income (loss) from the discontinued component.

The companys effective tax rate is 20%.

The following is unadjusted trial balance at 12/31/21 (all $ values in thousands). The accounts are not organized in the traditional way of trial balances (that would make the balance sheet too easy to make!)

Debit

Credit

Factories

20,000

Bonds payable (due 2030)

10,000

Inventory

3,500

Allowance for sales returns

3

Common stock

300

Accounts payable

800

Deferred revenue

4,000

Accumulated depreciation factories

1,000

Prepaid insurance contracts

300

Patents

900

Equipment

5,000

Available for sale debt securities

600

Salary expense

3,000

Research and development

2,700

Additional paid-in capital

2,000

Accumulated depreciation equipment

600

Accounts receivable

1,000

Accumulated other comprehensive income

200

Trading securities

90

Dividends payable

20

Retained earnings

11.100

Treasury stock

200

Sales revenue

14,000

Utilities expense

30

Cost of goods sold

5,500

Allowance for doubtful accounts

5

Sales discounts

238

Land

100

Cash and equivalents

220

Loss on disposal of discontinued operations

650

Additional information (some but not all of this information will be used to determine adjusting entries, dont assume everything here is an adjusting item):

  1. 10% of the cash equivalent balance on the unadjusted trial balance is legally restricted and tied to the companys long-term bonds payable.

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