Book Show Me How Calculator Print Itenm Instructions Your examination of Sulivan

Question

Book Show Me How Calculator Print Itenm Instructions Your examination of Sulivan Company's records provides the following information for the December 31, year-end adjustments 1. Bad debts are to be recorded at 2% of sales. Sales made on credit totaled $20,000 for the year. 2. Salaries at year-end that have accumulated but have not been paid total $1,400 3. Annual straight-line depreciation for the company's equipment is based on a cost of $25,000, anfestimated life of 8 years, and an estimated residual value of $1,000. 4. Prepaid insurance in the amount of $800 has expired. 5. Interest that has been earned but not collected totals $500. 6. The company has satisfied performance obligations entitling it to rent in the amount of $1,000. 7. Interest on a note payable that has accumulated but has not been paid totals $600 8. The income tax rate is 30% on current income and is payable in the first quarter of the next year. The pretax income before the preceding adjusting entries is $7,000. Required Prepare the adjusting entries to record the preceding information.

Explanation / Answer

Adjusting entries: S.no. Accounts title and explanations Debit $ Credit $ 1 Bad debts expense Dr. 400     Allowance for uncollectible accounts 400 2 Salaries and wages expense Dr. 1400    Salaries and wages payable 1400 3 Depreciation expense Dr. 3000     Accumulated depreciation (25000-1000)/8 3000 4 Insurance expense Dr. 800    Prrepaid insurance account 800 5 Interest receivable Dr. 500      Interest revenue 500 6 Unearned rent revenue Dr. 1000     Rent revenue 1000 7 Interest expense Dr. 600    Interest payable 600 8 Income tax expense Dr. 2100    Income tax payable (7000*30%) 2100

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