I need help figuring out closing entries!!! TREVOR CORPORATION Balance Sheet Dec
ID: 2482298 • Letter: I
Question
I need help figuring out closing entries!!!
TREVOR CORPORATION
Balance Sheet
December 31, 2013
Cash
$ 30,000
Accounts payable
$ 13,750
Inventory
30,750
Interest payable
2,500
Prepaid insurance
5,600
Bonds payable
50,000
Equipment
38,000
Common stock
25,000
$104,350
Retained earnings
13,100
$104,350
During 2014, the following transactions occurred.
1.
Trevor paid $2,500 interest on the bonds on January 1, 2014.
2.
Trevor purchased $241,100 of inventory on account.
3.
Trevor sold for $480,000 cash inventory which cost $265,000. Trevor also collected $28,800 sales taxes.
4.
Trevor paid $230,000 on accounts payable.
5.
Trevor paid $2,500 interest on the bonds on July 1, 2014.
6.
The prepaid insurance ($5,600) expired on July 31.
7.
On August 1, Trevor paid $10,200 for insurance coverage from August 1, 2014, through July 31, 2015.
8.
Trevor paid $17,000 sales taxes to the state.
9.
Paid other operating expenses, $91,000.
10.
Redeemed the bonds on December 31, 2014, by paying $48,000 plus $2,500 interest.
11.
Issued $90,000 of 8% bonds on December 31, 2014, at 103. 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, 2013, 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
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Journal Entries Date Account title Debit $ Credit $ 1 Interest payable 2500 Cash 2500 2 Inventory ( merchandise Goods) 241100 Accounts payable 241100 3 Cash 480000 Sales 480000 Sales Taxes 28800 4 Accounts payable 230000 Cash 230000 5 Interest Exp 2500 Bonds payable 2500 6 Insurance Exp 5600 Prepaid insurance 5600 7 Insurance Exp 4250 Prepaid insurance 5950 Cash 10200 8 Sales Taxes 17000 Cash 17000 9 operating Expenses 91000 Cash 91000 10 Bonds Payable 50000 Interst Expenses 2500 Cash 50500 Discount on bond 2000 11 Cash 92700 Premioum on bond payable 2700 Bonds Payable 90000 Interst payable 3600 Bonds Payable 3600 12 7000 Depreciation exp 7000 Accmulated Depreciation (Equipment) (38000-3000/5 13 Tax on retained earning 31245 tax payable 31245Related Questions
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