Good luck shoes Coporation operates a store that sells shoes. The following are
ID: 2456841 • Letter: G
Question
Good luck shoes Coporation operates a store that sells shoes. The following are transactions that occuured during the first quarter of operations- Jan. 1to Mar. 31,2015.
Jan. 1 Two individuals each invested $50,000 in the corporation. Each investor was
issued 5,000 shares of $2 par value common stock.
Jan. 2 Purchased furniture and fixtures from Acme Furniture for $9,600 cash.
Jan. 4 Purchased $1,500 of supplies for cash.
Jan. 15 Paid $18,000 in advance for one years rent on the store building. The rent begins with
Jan 15. The company counts January for half a month.
Jan. 31 Paid salaries to employees for the first month, $3,000.
Feb. 1 Purchased $65,000 of shoes inventory on account from the Birdwell Shoes
Manufacturing Company.
Feb. 1 Borrowed $54,000 from a local bank and signed two notes. The first note of
$15,000 requires payment of principal in six months with annual interest rate at 10%.
The second note of $39,000 requires the payment of principal in two years and annual
interest payment with annual interest rate at 12%.
Feb. 6 Sold shoes on account to St. Judes School for $6,000. Cost of the shoes sold
is $4,000.
Feb. 9 Paid Birdwell Shoes Manufacturing Company cash $42,000 for the purchase on Feb. 1.
Feb. 20 Sold shoes to a chemical factory for $66,000 cash. Cost of the shoes sold is $38,000.
Feb. 23 Purchased $10,000 of shoes inventory on account from the Birdwell Shoes
Manufacturing Company.
Feb. 28 Paid salaries to employees for the month of February, $3,500.
Mar. 1 Sold shoes to the football team of Robert Lee High School, and accepted a note
receivable of $10,000, due in three-month, with annual interest at 12%. Cost of the
shoes sold is $8,000.
Mar. 1 Subleased a portion of the building to a jewelry store. Received $3,000 in advance
for three months rent beginning on Mar. 1.
Mar. 3 Some shoes were returned by the chemical factory which made a purchase on Feb. 20.
The selling price and cost of the returned shoes is $6,000 and 3,400, respectively.
Cash of $6,000 is returned to the customer.
Mar. 23 Paid Birdwell Shoes Manufacturing Company $12,000 on account.
Mar. 25 Received $4,000 cash from St. Judes School.
Mar. 30 The corporation announced and paid its shareholders cash dividends of $2,000.
Record adjusting entries in General Journal and post to the general ledger accounts.
Additional information
At the end of March, $1,000 of supplies remained.
The furniture and fixtures have a useful life of five years and will be worthless at the end of
their useful life.
Salaries for the month of March are $4,000, to be paid on April 3, 2013.
The companys management estimated that of the $2,000 remaining on account from St.
Judes, only $1,800 would ultimately be collected.
Income tax rate applied to the company is 30%.
**I need help for last part. I finished all of adjusting entries except last part.
I know that i can get the income tax payable = Income before tax*30%
How do i get the income before tax?
Explanation / Answer
Income Statement will be prepared to find out income before tax:
$ Sales 6000+ 66000+ 10000 82000 - Sales Return -6000 Net Sales 76000 Closing Stock 1000 77000 + Interest receivable on notes 10000*12% *1/12 100 +Rent Receivable 1000 78100 - Cost of Goods Sold 4000+38000+8000 -50000 Income from operations 28100 - Other expenses: Rent[18000 - (18000/12 *2.5)] -14250 Salaries 3000+3500+4000 -10500 Interest on notes payable 500 + 780 -1280 Depreciation on furniture (9600/5 )*3/12 -480 Dividend paid -2000 Income before taxes -410Related Questions
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