MARKL CORP balance sheet dec 31, 2011 cash 30,000 inventory 30,750 prepaid insur

Question

MARKL CORP balance sheet dec 31, 2011 cash 30,000 inventory 30,750 prepaid insurance 5,600 equipment 38,000 ________________________ 104,350 accounts payable 13,750 interest payable 2,500 bonds payable 50,000 common stock 25,000 retained earnings 13,100 ____________________________ 104,350 during 2012, the following transactions occurred: 1.Markel paid $2,500 interest on the bonds on January 1, 2012. 2. Markel paid $241,100 of inventory on account. 3. Markel sold for $480,000 cash inventory which cost $265,000. Markel also collected $28,800 sales taxes. 4. Markel paid $230,000 on accounts payable. 5. Markel paid $2,500 interest on the bonds on July 1, 2012 6. The prepaid insurance ($5,600) expired on July 31. 7. On August 1, Markel paid $10,200 for insurance coverage from August 1, 2012, through July 31, 2013 8. Markel paid $17,000 sales taxes to the state 9. Paid other operating expenses, $91,000. 10. Retired the bonds on December 31, 2012, by paying $48,000 plus $2,500 interest. 11. Issued $90,000 of 8% bonds on December 31, 2012, 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 December 31, 2011, 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.) Instructions: (You may want to set up T accounts to determine ending balances.) (a) Prepare journal entries for the transactions listed above and adjusting entries. Don't date! Use transaction number. (b) Prepare and adjusted trial balance at December 31, 2012. (c) Prepare an income statement and a retained earnings statement for the year ending December 31, 2012, and a classified balance sheet as of December 31, 2012. THANK YOU!! I really need to check the homework that I already did. It was due last Wednesday and I really need to turn it in asap. :)

Explanation / Answer

 

B. Trial Balance as on 31.12.2009
Capital Account
Common Stock 20000
Loans (Liability)
Bonds Payable 50000
Current Liabilities
Accounts Payable 13750
Bonds Interest Payable 3000
Fixed Assets
Equipment 38000
Current Assets
Cash-in-hand 30500
Inventory 25750
Prepaid Insurance 5600
Profit & Loss A/c 13100

Total 99850 99850

TRIAL BALANCE 31-12-2010
Capital Account
Common Stock 20000
Loans (Liability)
Unsecured Loans 93600
Bonds Payable 2000
Current Liabilities
Sundry Creditors 241400
Accounts Payable 216250
Bonds Interest Payable 3000
Sales Tax 10000
Fixed Assets
Equipment 31000
Current Assets 281100
Opening Stock
Sundry Debtors 477000
Cash-in-hand 281100
Inventory 25750
Prepaid Insurance 5950
Sales Accounts 450000
Sales 450000
Purchase Accounts
Purchases 241400
Indirect Expenses
Depreciation 7000
Insurance 9850
Interest on Bonds 9000
Operating Expenses 91000
Profit & Loss A/c 13100

TAX TREATMENT @ 30%:
Net Profit is 83,150
Tax @ 30% 24945

interest expenses $3,000            cash   $3,000       Inventory $241,100          Accounts payable   $241,100       cash $450,000          sales   $450,000       cost of goods sold $250,000           inventory   $250,000       Accounts payable $230,000           cash   $230,000       interest expenses $3,000         cash   $3,000             insurance expenses $5,600           prepaid insurance   $5,600       insurance expenses $10,200          prepaid insurance   $10,200       sales tax expenses $17,000          cash   $17,000       operating expenses $91,000          cash   $91,000             Bonds payable $48,000   interest on bonds $3,000           cash   $51,000       cash $93,600           Bonds payble   $90,000         premium on bonds payable $3,600       inssurance expenses $4,250           prepaid insurance   $4,250 Depreciation expenses $7,000          Accumulated deprecition   $7,000

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