I need help completing A, B, C (a) Prepare journal entries for the transactions

Question

I need help completing A, B, C 
(a) Prepare journal entries for the transactions listed above and adjusting entries
(b)Prepare an adjusted trial balance at decmeber 31, 2009

(c) Prepare all necessary closing entries.
Use the following information to complete A, B and C above.


Aber Corporation's balance sheet at December 31, 2009, is presented below.

ABER CORPORATION
Balance Sheet
December 31, 2009 
Cash $30,500                           Accounts payable $13,750
Inventory 25,750                    Bond interest payable 3,000
Prepaid insurance 5,600          Bonds payable 50,000
Equipment 38,000                   Common stock 20,000
total $99,850                                Retained earnings $13,100
                                                        total $99,850



During 2010, the following transactions occurred.

1. Aber paid $3,000 interest on the bonds on January 1, 2010.

2. Aber purchased $241,100 of inventory on account.

3. Aber sold for $450,000 cash inventory which cost $250,000. Aber also collected $27,000 sales taxes.

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

5. Aber paid $3,000 interest on the bonds on July 1, 2010.

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

7. On August 1, Aber paid $10,200 for insurance coverage from August 1, 2010, through July 31, 2011.

8. Aber paid $17,000 sales taxes to the state.

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

10. Retired the bonds on December 31, 2010, by paying $48,000 plus $3,000 interest.

11. Issued $90,000 of 8% bonds on December 31, 2010, at 104. 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, 2009, 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.)

Explanation / Answer

A. Journal Entries: 1. Aber paid $3,000 interest on the bonds on January 1, 2010. 01.01.2010 Interest on Bonds A/c – Dr 3000 To cash A/c 3000 2. Aber purchased $241,100 of inventory on account. Purchases/Goods A/c Dr 241400 To Accounts Payable a/c 241400 3. Aber sold for $450,000 cash inventory which cost $250,000. Aber also collected $27,000 sales taxes. Accounts Receivables a/c --- Dr 477000 To Sales Tax 27000 To Sales 450000 4. Aber paid $230,000 on accounts payable Accounts payable A/c --- Dr 230000 To Cash A./c. 230000 5. Aber paid $3,000 interest on the bonds on July 1, 2010. 01.07.2010 Interest on Bonds A/c – Dr 3,000 To Cash A/.c 3,000 6. The prepaid insurance ($5,600) expired on July 31. 31.07.2010 Insurance a/c – Dr 5600 To prepaid Insurance 5600 7. On August 1, Aber paid $10,200 for insurance coverage from August 1, 2010, through July 31, 2011. 01.08.2010 Insurance A/c – Dr 10200 To cash A/c 10200 8. Aber paid $17,000 sales taxes to the state. Sales Tax A/c – Dr 17,000 To Cash A/.c 17,000 9. Paid other operating expenses, $91,000 Operating Expenses A/c – Dr 91000 To Cash A/c 91000 10. Retired the bonds on December 31, 2010, by paying $48,000 plus $3,000 interest. 31.12.2010 Bonds A/c --- Dr 48000 Interest on Bonds A.c – Dr 3000 To Cash A/c 51000 11. Issued $90,000 of 8% bonds on December 31, 2010, at 104. The bonds pay interest every June 30 and December 31. 31.12.2010 Cash A.c --- Dr 90,000 To 8% bonds 90,000 C. Adjustment Entries Prepaid Insurance A/c – Dr 5950 To InsuranceA/c 5950 Depreciation a/c—Dr 7000 To Equipment 7000 B. Trial Balance as on 31.12.2009 Capital Account Common Stock 20000 Loans (Liability) Bonds Payable 50000 Current Liabilities Accounts Payable 13750 Bonds Interest Payable 3000 Fixed Assets Equipment 38000 Current Assets Cash-in-hand 30500 Inventory 25750 Prepaid Insurance 5600 Profit & Loss A/c 13100 Total 99850 99850 TRIAL BALANCE 31-12-2010 Capital Account Common Stock 20000 Loans (Liability) Unsecured Loans 93600 Bonds Payable 2000 Current Liabilities Sundry Creditors 241400 Accounts Payable 216250 Bonds Interest Payable 3000 Sales Tax 10000 Fixed Assets Equipment 31000 Current Assets 281100 Opening Stock Sundry Debtors 477000 Cash-in-hand 281100 Inventory 25750 Prepaid Insurance 5950 Sales Accounts 450000 Sales 450000 Purchase Accounts Purchases 241400 Indirect Expenses Depreciation 7000 Insurance 9850 Interest on Bonds 9000 Operating Expenses 91000 Profit & Loss A/c 13100 TAX TREATMENT @ 30%: Net Profit is 83,150 Tax @ 30% 24945

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