a. Post all adjusting journal entries necessary on December 31, 2015 to the tria

Question

a. Post all adjusting journal entries necessary on December 31, 2015 to the trial balance. Create additional accounts as necessary.

b. Prepare the adjusted trial balance.

c. Prepare the closing entry at December 31, 2015.

? d. Prepare the 2015 classified balance sheet and multistep income statement for Baker & Company in good form.

Page two contains the unadjusted trial balance for Baker & Company as of December 31, 2015 All entries for the year have been recorded except for the following adjusting entries: (Assume no other adjusting journal entries were made during 2015) 1) The company paid $60,000 on September 1, 2015 for insurance coverage thru August 2016. Depreciation expense for the year was $35,000 Baker issued gift cards in 2014 as part of a special promotion. $60,000 in gift cards expired on December 31,2015 A physical count of supplies indicated that $30,000 was on hand at the end of the year. Baker employees earned wages of $20,000 for working 4 days at the end of the year. The wages will be paid in January Baker issued a $150,000 three-year note on September 1 . The interest on the note is 10%. Interest is paid semi-annually, A physical count of merchandise inventory indicated that $105,000 was on hand at the end of the year. The income tax rate is 40% 2) 3) 4) 5) 6) 7) 8) Required a. Post all adjusting journal entries necessary on December 31, 2015 to the trial balance Create additional accounts as necessary b. Prepare the adiusted trial balance. c. Prepare the closing entry at December 31, 2015. d. Prepare the 2015 classified balance sheet and multistep income statement for Baker & Company in good form

Explanation / Answer

Answer for question no.a and c:

Date Entry Debit Credit Remarks 31-Dec Insuance expense a/c   Dr $20,000.00 (60000/12)*4 To Prepaid insurance a/c Dr $20,000.00 (Being Insurance expense recognised for the current period) 31-Dec Accumulated depreciation $15,000.00 50000-35000 To Depreciation $15,000.00 (Being excess depreciation written off reversed) 31-Dec Unearned revenue a/c Dr $60,000.00 To Sales revenue $60,000.00 (Being revenue recognized for expired gift cards) 31-Dec Supplies expense a/c Dr $10,000.00 40000-30000 To Supplies a/c Dr $10,000.00 (Being supplies expense recognized) 31-Dec Wages expense a/c Dr $20,000.00 To Wages payable a/c Cr $20,000.00 (Being outstanding wages recorded in the books) 31-Dec Interest expense a/c Dr $5,000.00 (((150000*10%)/2)/6)*4 To Interest payabe a/c   Cr $5,000.00 (Being interest expense for the period recognised) 31-Dec Cost of goods sold a/c   Dr $15,000.00 120000-105000 To Inventory a/c Cr $15,000.00 (Being cost of goods sold adjusted for the difference in value of inventory in hand) Closing entries 31-Dec Income summary a/c Dr To Cost of goods sold a/c Cr 705000 690000+15000 To Advertising expense a/c Cr $85,000.00 To Depreciation expense a/c Cr $35,000.00 To Insurance expense a/c Cr $60,000.00 To Interest expense a/c Cr $5,000.00 To wages expense a/c Cr 570000 550000+20000 To supplies expense a/c Cr 10000 (Being expenses transferred to income summary a/c) 31-Dec Sales revenue a/c Dr $1,160,000.00 To Income summary a/c Cr $1,160,000.00 (Being sales revenue transferred to income summar a/c) 31-Dec Retained earnings a/c Dr $310,000.00 To Income summary a/c Cr $310,000.00 0.075 (Being loss on operations transferred to retained earnings a/c) 31-Dec Income tax expense a/c Dr As there is loss for the year there is no income tax payable To income tax payable a/c Cr (Being income tax payable provided in the books of account)

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