Brokeback Towing Company is at the end of its accounting year, December 31, 2013

Question

Brokeback Towing Company is at the end of its accounting year, December 31, 2013. The following data that must be considered were developed from the company’s records and related documents: a. On July 1, 2013, a two-year insurance premium on equipment in the amount of $720 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1. b. At the end of 2013, the unadjusted balance in the Office Supplies account was $1,000. A physical count of supplies on December 31, 2013, indicated supplies costing $350 were still on hand. c. On December 31, 2013, YY’s Garage completed repairs on one of Brokeback’s trucks at a cost of $850. The amount is not yet recorded. It will be paid during January 2014. d. In December the 2013 property tax bill for $1,650 was received from the city. The taxes, which have not been recorded, will be paid on February 15, 2014. e. On December 31, 2013, the company completed a contract for an out-of-state company for $8,200 payable by the customer within 30 days. No cash has been collected and no journal entry has been made for this transaction. f. On July 1, 2013, the company purchased a new hauling van. Depreciation for July–December 2013, estimated to total $3,000, has not been recorded. g. As of December 31, the company owes interest of $550 on a bank loan taken out on October 1, 2013. The interest will be paid when the loan is repaid on September 30, 2014. No interest has been recorded yet. h. The income before any of the adjustments or income taxes was $32,000. The company’s federal income tax rate is 30%. Compute adjusted income based on all of the preceding information, and then determine and record income tax expense. Required:

1. Give the adjusting journal entry required for each item at December 31, 2013. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Without the adjustments made in requirement 1, by what amount would Brokeback's net income have been understated or overstated? and by how much?

f Facebook ·[WTS] Overwatch renting Chegg Study l Guided Sol Hom ework 4 X × X -> Liezto.mheducation.com/hm.tpx a. On July 1, 2013, a two-year insurance premium on equipment in the amount of $720 was paid and debited b. At the end of 2013, the unadjusted balance in the Office Supplies account was $1,000. A physical count c. On December 31, 2013, YY's Garage completed repairs on one of Brokeback's trucks at a cost of $850 d. In December the 2013 property tax bill for $1,650 was received from the city. The taxes, which have not e. On December 31, 2013, the company completed a contract for an out-of-state company for $8,200 in full to Prepaid Insurance on that date. Coverage began on July 1 of supplies on December 31, 2013, indicated supplies costing $350 were still on hand The amount is not yet recorded. It will be paid during January 2014 been recorded, will be paid on February 15, 2014 payable by the customer within 30 days. No cash has been collected and no journal entry has been made for this transaction. f. On July 1, 2013, the company purchased a new hauling van. Depreciation for July-December 2013 estimated to total $3,000, has not been recorded g. As of December 31, the company owes interest of $550 on a bank loan taken out on October 1, 201:3 The interest will be paid when the loan is repaid on September 30, 2014. No interest has been recorded et h. The income before any of the adjustments or income taxes was $32,000. The company's federal income tax rate is 30%. Compute adjusted income based on all of the preceding information, and then determine and record income tax expense Required 1. Give the adjusting journal entry required for each item at December 31, 2013. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list view general journal Journal Entry Worksheet 033000 Record the entry for insurance epente aiont Record the entry for insurance expense if, on July 1, 2013, a two-year insurance premium on equipment in the amount of $720 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July a Transaction General Journal Debit Credit Enter debits before credits done ar entry record entry 6:54 PM 2/12/2016 Ask me anything

Explanation / Answer

Journal entry

income $33,320 after adjsutment

33,320 @30% = $9996

Debit Credit Insurance expense $180 To Insurance (720/24*6) $180 Office supplies expense $650 To Supplies $650 Repairs & Maintenance $850 To Account paayble $850 Property tax $1,650 To Property taxes payable $1,650 Account receivable $8,200 To Service revenue $8,200 Depreciation expense $3,000 To Accumulated depreciation $3,000 interest expense $550 To Interest paayble $550

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