Unadjusted trial balance at December 1, 2012- debits: cash 22,000 accounts recei
ID: 2378916 • Letter: U
Question
Unadjusted trial balance at December 1, 2012-debits:
cash 22,000
accounts receivable 36,800
notes receivable 10,000
interest receivable 0
inventory 36,200
prepaid insurance 3,600
land 20,000
buildings 150,000
equipment 60,000
patent 9,000
dividends 12,000
bad debts expense 0
cost of goods sold 630,000
depreciation expense 0
insurance expense 0
interest expense 0
other operating expenses 61,800
amortization expense 0
salaries and wages expense 110,000
credits:
allowance for doubtful accounts 500
accumulated depreciation- buildings 50,000
accumulated depreciation- equipment 24,000
accounts payable 27,300
salaries and wages payable 0
notes payable (due April 30, 2013) 11,000
interest payable 0
notes payable (due in 2018) 35,000
common stock 50,000
retained earnings 63,600
sales revenue 900,000
interest revenue 0
gain on disposal of plant assets 0
the following transactions occurred during December.
Dec. 2 Paulson purchased equipment for $16,000 plus sales taxes of $800 (all paid in cash)
Dec. 2 Paulson sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2010; was $1,800; 2012 depreciation prior to the sale of equipment was $450.
Dec. 15 Paulson sold for $5,000 on account inventory that cost $3,500
Dec. 23 Salaries and wages of $6,600 were paid.
Adjustment Data:
1. Paulson estimates that uncollectible accounts receivable at year-end are $4,000.
2. the note receivable is a one-year, 8% note dated April 1, 2012. No interest has been recorded.
3. the balance in prepaid insurance represents payment of a $3,600, 6 month premium on September 1, 2012.
4. the building is being depreciated using the straight-line method over 30 years. the salvage value is $30,000.
5. the equipment owned prior to this year is being depreciated using the straight-line method over 5 years. the salvage value is 10% of cost.
6. the equipment purchased on December 2, 2012 is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.
7. the patent was acquired on January 1, 2012, and has a useful life of 9 years from that date.
8. unpaid salaries at December 31, 2012, total $2,200
9. both the short-term and long-term notes payable are dated January 1, 2012, and carry a 10% interest rate. all interest is payable in the next 12 months.
10. income tax expense was %15,000. it was unpaid at December 31.
Instructions:
a. prepare journal entries for the transactions listed above and adjusting entries.
b. prepare an adjusted trial balance at December 31, 2012.
Explanation / Answer
Dec. 2 Paulson purchased equipment for $16,000 plus sales taxes of $800 (all paid in cash)
Debit Equipment 16,800
Credit Cash 16,800
Dec. 2 Paulson sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2010; was $1,800; 2012 depreciation prior to the sale of equipment was $450.
Debit Depreciation expense 450
Credit Accumulated Depreciation 450
Debit cash 3,500
Debit Accumulated Depreciation 2,250
Credit Equipment 5,000
Credit Gain on sale 750
Dec. 15 Paulson sold for $5,000 on account inventory that cost $3,500
Debit Accounts receivable 5000
Credit Sales 5000
Debit Cost of Goods sold 3,500
Credit Merchandise Inventory 3,500
Dec. 23 Salaries and wages of $6,600 were paid.
Debit: Salaries Expense 6,600
Credit: Cash 6,600
Adjustment Data:
1. Paulson estimates that uncollectible accounts receivable at year-end are $4,000.
Debit Bad debt expense 3500
Credit Allowance for Doubtful Acounts 3500
2. the note receivable is a one-year, 8% note dated April 1, 2012. No interest has been recorded.
Debit Interest Receivable 600
Credit Interest Revenue 600
3. the balance in prepaid insurance represents payment of a $3,600, 6 month premium on September 1, 2012.
Debit Insurance Expense 2400
Credit Prepaid insurance 2400
4. the building is being depreciated using the straight-line method over 30 years. the salvage value is $30,000.
Debit Depreciation expense 4000
Credit Accumulated Depreciation 4000
5. the equipment owned prior to this year is being depreciated using the straight-line method over 5 years. the salvage value is 10% of cost.
Debit Depreciation expense 9,900
Credit Accumulated Depreciation 9,900
6. the equipment purchased on December 2, 2012 is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.
Debit depreciation expense 3000
Credit accumulated depreciation 3000
7. the patent was acquired on January 1, 2012, and has a useful life of 9 years from that date.
Debit amortization expense 1,000
Credit patent 1,000
8. unpaid salaries at December 31, 2012, total $2,200
Debit Salaries expense 2,200
Credit Salaries payable 2,200
9. both the short-term and long-term notes payable are dated January 1, 2012, and carry a 10% interest rate. all interest is payable in the next 12 months.
Debit interest expense 4600
Credit interest payable 4600
10. income tax expense was %15,000. it was unpaid at December 31.
Debit: Income tax expense 15,000
Credit Income tax payable 15,000
Top of Form
adjusted trial balance at December 31, 2012-
Bottom of Form
debits:
cash
2100
accounts receivable
41800
notes receivable
10000
interest receivable
600
inventory
32700
prepaid insurance
1200
land
20000
buildings
150000
equipment
71800
patent
8000
dividends
12000
bad debts expense
3500
cost of goods sold
633500
depreciation expense
17350
insurance expense
2400
interest expense
4600
income tax payable
15000
other operating expenses
61800
amortization expense
1000
salaries and wages expense
118800
1208150
credits:
allowance for doubtful accounts
4000
accumulated depreciation- buildings
54000
accumulated depreciation- equipment
35100
accounts payable
27300
salaries and wages payable
2200
notes payable (due April 30, 2013)
11000
interest payable
4600
income tax payable
15000
notes payable (due in 2018)
35000
common stock
50000
retained earnings
63600
sales revenue
905000
interest revenue
600
gain on disposal of plant assets
750
1208150
Top of Form
adjusted trial balance at December 31, 2012-
Bottom of Form
debits:
cash
2100
accounts receivable
41800
notes receivable
10000
interest receivable
600
inventory
32700
prepaid insurance
1200
land
20000
buildings
150000
equipment
71800
patent
8000
dividends
12000
bad debts expense
3500
cost of goods sold
633500
depreciation expense
17350
insurance expense
2400
interest expense
4600
income tax payable
15000
other operating expenses
61800
amortization expense
1000
salaries and wages expense
118800
1208150
credits:
allowance for doubtful accounts
4000
accumulated depreciation- buildings
54000
accumulated depreciation- equipment
35100
accounts payable
27300
salaries and wages payable
2200
notes payable (due April 30, 2013)
11000
interest payable
4600
income tax payable
15000
notes payable (due in 2018)
35000
common stock
50000
retained earnings
63600
sales revenue
905000
interest revenue
600
gain on disposal of plant assets
750
1208150
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