V4 Help Save & Exit Submit Check my work 3 Brokeback Towing Company is at the en
ID: 2340479 • Letter: V
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V4 Help Save & Exit Submit Check my work 3 Brokeback Towing Company is at the end of its accounting year, December 31, 2018. The following data that must be considered were developed from the company's records and related documents a On July 1, 2018, a two-year insurance premium on equipment in the amount of $648 was paid and debited in full to Prepaic b. At the end of 2013, the unadjusted balance in the Supplies account was $1,000 A physical count of supplies on December 31, 2018 c On December 31, 2018, YY's Garage completed repairs on one of Brokeback's trucks at a cost of $820. The amount is not yet d. On December 31, 2018, the company completed a contract for an out-of-state comp e On July 1. 2018, the company purchased a new hauling van. Depreciation for July-December 2018, estimated to total $2.850, has f As of December 31, the company owes interest of $520 on a bank loan taken out on October 1, 2018. The interest will be paid when g Assume the income after the preceding adjustments but before income taxes was $32,000. The company's federal income tax Insurance on that date. Coverage began on July 1 indicated supplies costing $320 were still on hand recorded. It will be paid during January 2019 30 days. No cash has been collected and no journal entry has been made for this transaction. not been recorded the loan is repaid on September 30, 2019 No interest has been recorded yet is 25%. Compute and record income tax expense eBook Print any for $8.050 payable by the customer within rate Reauired:Explanation / Answer
Brokeback towering Company
Adjustment entries
Transaction
General journal
Debit
Credit
A
Insurance expense [(648*6)/(2 years * 12 months)]
162
Prepaid insurance
162
(to record six month insurance premium expired.)
B
Supplies expense (1000-320)
680
Supplies
680
(To record supply expense.)
C
Repairs and maintenance expense
820
Repairs and maintenance payable
820
(To record repairs and maintenance expense this paid in next year.)
D
Account receivable
8050
Sales revenue
8050
(To record sales revenue.)
E
Depreciation expense – van
2850
Accumulated depreciation expense – van
2850
(To record depreciation expense on van.)
F
Interest expense
520
Interest payable
520
(To record accrued interest on loan.)
G
Income tax expense (32000*25%)
8000
Income tax payable
8000
(To record income tax expense.)
Transaction
Under stated income
D
Sales revenue
8050
Under stated expense
A
Insurance expense
162
B
Supplies expense
680
C
Repairs and maintenance expense
820
E
Depreciation expense - van
2850
F
Interest expense
520
G
Income tax expense
8000
Total under stated expenses
13032
Under (over) stated of net income
-4982
Overstated of net income
4982
Brokeback towering Company
Adjustment entries
Transaction
General journal
Debit
Credit
A
Insurance expense [(648*6)/(2 years * 12 months)]
162
Prepaid insurance
162
(to record six month insurance premium expired.)
B
Supplies expense (1000-320)
680
Supplies
680
(To record supply expense.)
C
Repairs and maintenance expense
820
Repairs and maintenance payable
820
(To record repairs and maintenance expense this paid in next year.)
D
Account receivable
8050
Sales revenue
8050
(To record sales revenue.)
E
Depreciation expense – van
2850
Accumulated depreciation expense – van
2850
(To record depreciation expense on van.)
F
Interest expense
520
Interest payable
520
(To record accrued interest on loan.)
G
Income tax expense (32000*25%)
8000
Income tax payable
8000
(To record income tax expense.)
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