The following account balances are available for Tenfour Trucking Company on January 31, 2012: Cash.......................................................................................$ 27,340 Accounts
Question:
The following account balances are available for Tenfour Trucking Company on January 31, 2012:
Cash.......................................................................................$ 27,340
Accounts Receivable...............................................................41,500
Prepaid Insurance....................................................................18,000
Warehouse...............................................................................40,000
Accumulated Depreciation-Warehouse................................21,600
Truck Fleet................................................................................240,000
Accumulated Depreciation-Truck Fleet................................112,500
Land.............................................................................................20,000
Accounts Payable...................................................................... 32,880
Notes Payable............................................................................50,000
Interest Payable...........................................................................4,500
Customer Deposits......................................................................6,000
Capital Stock.............................................................................100,000
Retained Earnings......................................................................40,470
Freight Revenue........................................................................165,670
Gas and Oil Expense...................................................................57,330
Maintenance Expense..................................................................26,400
Wage and Salary Expense............................................................43,050
Dividends.......................................................................................20,000
Required
1. Identify and analyze the necessary adjustments at January 31, 2012, for each of the following:
a. Prepaid insurance represents the cost of a 24-month policy purchased on January 1, 2012.
b. The warehouse has an estimated useful life of 20 years and an estimated salvage value of $4,000.
c. The truck fleet has an estimated useful life of six years and an estimated salvage value of $15,000.
d. The promissory note was signed on January 1, 2011. Interest at an annual rate of 9% and the principal of $50,000 are due on December 31, 2012.
e. The customer deposits represent amounts paid in advance by new customers. A total of $4,500 of the balance in Customer Deposits was earned during January 2012.
f. Wages and salaries earned by employees at the end of January but not yet paid amount to $8,200.
g. Income taxes are accrued at a rate of 30% at the end of each month.
2. Prepare in good form the following financial statements:
a. Income statement for the month ended January 31, 2012
b. Statement of retained earnings for the month ended January 31, 2012
c. Balance sheet at January 31, 2012
3. Compute Tenfour's current ratio. What does this ratio tell you about the company's liquidity?
4. Compute Tenfour's profit margin. What does this ratio tell you about the company's profitability?
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 a The effect of the adjustment on January 31 can be identified and analyzed as follows b The effect of the adjustment on January 31 can be identified and analyzed as follows c The effect of the adju...View the full answer
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
