Given the following info, I created a trial balance (also shown below): Karen No
ID: 2515657 • Letter: G
Question
Given the following info, I created a trial balance (also shown below):
Karen Noonan opened Kingbird Inc. on February 1, 2017. During February, the following transactions were completed:
TRIAL BALANCE AS OF FEB 28.
So knwoing all that ^^ I have to journalize more transactions. I've got most of it right so I'm hoping you can just fill in the blanks and explain the work. Here are the new transactions I have to journalize:
Karen estimates a 20% income tax rate. (Hint: Prepare an income statement up to “income before taxes” to help with the income tax calculation.)
Here are the journal entries (only included the ones i got right):
Feb. 1 Issued 4,400 shares of Kingbird common stock for $13,260. Each share has a $1.50 par. 1 Borrowed $8,000 on a 2-year, 6% note payable. 1 Paid $9,200 to purchase used floor and window cleaning equipment from a company going out of business ($4,440 was for the floor equipment and $4,760 for the window equipment). 1 Paid $220 for February Internet and phone services. 3 Purchased cleaning supplies for $1,000 on account. 4 Hired 4 employees. Each will be paid $490 per 5-day work week (Monday– Friday). Employees will begin working Monday, February 9. 5 Obtained insurance coverage for $11,040 per year. Coverage runs from February 1, 2017, through January 31, 2018. Karen paid $2,760 cash for the first quarter of coverage. 5 Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Karen sold the window cleaning equipment for $4,030 cash. 16 Billed customers $3,980 for cleaning services performed through February 13, 2017. 17 Received $504 from a customer for 4 weeks of cleaning services to begin February 21, 2017. 18 Paid $310 on amount owed on cleaning supplies. 20 Paid $3 per share to buy 300 shares of Kingbird common stock from a shareholder who disagreed with management goals. The shares will be held as treasury shares. 23 Billed customers $4,390 for cleaning services performed through February 20. 24 Paid cash for employees’ wages for 2 weeks (February 9–13 and 16–20). 25 Collected $2,550 cash from customers billed on February 16. 27 Paid $220 for Internet and phone services for March. 28 Declared and paid a cash dividend of $0.25 per share.Explanation / Answer
the adjusting journal entries (rightly completed):
account titles
debit ($)
credit ($)
(1) ACCOUNTS RECEIVABLE
3880
SERVICE REVENUE
3880
(2) ALLOWANCE FOR DOUBTFUL ACCOUNTS
200
ACCOUNTS RECEIVABLE
200
(3) BAD DEBT EXPENSE (5820*3%)
174.60
ALLOWANCE FOR DOUBTFUL ACCOUNTS
174.60
(4)DEPRECIATION EXPENSE(4440-600)/48
80
ACCUMULATED DEPRECIATION-EQUIPMENT
80
(5) INSURANCE EXPENSE(11040/12)
920
PREPAID INSURANCE
920
(6) SUPPLIES EXPENSE
590
SUPPLIES
590
(7) UNEARNED SERVICE REVENUE
126
SERVICE REVENUE
126
(8) SALARIES AND WAGES EXPENSE
1960
SALARIES AND WAGES PAYABLE
1960
(9) INTEREST EXPENSE(8000*6%/12)
40
INTEREST PAYABLE
40
(10) INCOME TAX EXPENSE
748.28
INCOME TAXES PAYABLE
748.28
Income before tax = 8370+3880+126-22003920-730-174.6-80-920-590-1960-40=3741.40
Income tax = 3741.40*20%=748.28
account titles
debit ($)
credit ($)
(1) ACCOUNTS RECEIVABLE
3880
SERVICE REVENUE
3880
(2) ALLOWANCE FOR DOUBTFUL ACCOUNTS
200
ACCOUNTS RECEIVABLE
200
(3) BAD DEBT EXPENSE (5820*3%)
174.60
ALLOWANCE FOR DOUBTFUL ACCOUNTS
174.60
(4)DEPRECIATION EXPENSE(4440-600)/48
80
ACCUMULATED DEPRECIATION-EQUIPMENT
80
(5) INSURANCE EXPENSE(11040/12)
920
PREPAID INSURANCE
920
(6) SUPPLIES EXPENSE
590
SUPPLIES
590
(7) UNEARNED SERVICE REVENUE
126
SERVICE REVENUE
126
(8) SALARIES AND WAGES EXPENSE
1960
SALARIES AND WAGES PAYABLE
1960
(9) INTEREST EXPENSE(8000*6%/12)
40
INTEREST PAYABLE
40
(10) INCOME TAX EXPENSE
748.28
INCOME TAXES PAYABLE
748.28
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