Financial Statement Problem (75 points) The following is a post-closing trial ba

Question

Financial Statement Problem (75 points) The following is a post-closing trial balance for Owl Delta Co.: Owl Delta Co Post-Closing Trial Balance December 31, 2016 Credit Debit 50,000 32,000 78,000 90,00025,000 Cash Accounts Receivable Inventory Building Accumulated Depreciation, Bldg Land Accounts Payable Mortgage Payable Capital Stock Retained Earnings 67,000 18,000 59,000 84,000 131.000 317,000 Total 317,000 During 2017, the company had the following transactions: A. Paid $15,000 for a 15 month insurance policy beginning January 1, 2017 C. Purchased Inventory on account, $22,000 D. Sold inventory costing $90,000 for $195,000: $75,000 were cash sales and the balance were Rent of $21,000 sold on account, terms 2/10, n/30 A customer filed bankruptcy during the year, wrote off their acount of $15,000. The company uses the Direct Write-Off Method of accounting for Bad Debts. F. Paid Salaries of $36,000 G. Property taxes of $12,000 were paid for the period of July 1, 2017 to June 30, 2018. H. Collected the accounts receivable from (D.) above within the discount period. I. A cash dividend of $7,000 was paid during the year J. Paid $6,000 of Accounts Payable Required: Prepare journal cntries to record each of the 2017 transactions. Post the journal entries to the ledger (t-accounts) DON'T FORGET THE BEGINNING BALANCES FROM THE TRIAL BALANCE ABOVE 1. 2. 3. Prepare a Trial Balance at December 31, 2017 4. Complete Adjusting Journal entries a. Salaries from December 16 through December 31 amounted to $2,500 Depreciation of the Building was $7,000 5. 6. 7. b. Prepare Adjusted Trial Balance. Prepare an Income Statement, Balance Sheet, Statement of RE Prepare closing entries.

Explanation / Answer

1.

Journal Entries

Dr. Cr.

A. Insurance Expense A/c 15000

To Insurance Prepaid 15000

B. Rent A/c 21000

To Cash A/c 21000

C. Purchase A/c 22000

To Accounts Payable A/c 22000

D. Cash A/c 75000

Receivables A/c 120000

To Sales 195000

E. Bad Debts 15000

To Receivables 15000

F. Salaries A/c 36000

To Cash A/c 36000

G. Tax Expense A/c 12000

Tax Payable A/c 12000

H. Cash A/c 117600

Discount Allowed 2400

To Receivables A/c 120000

I. Dividend Payable 7000

To Cash A/c 7000

J. Accounts Payable 6000

To Cash A/c 6000

B. Ledger A/c's

Insurance Payable A/c

Rent A/c

Purchase A/c

Accounts Payable A/c

Receivables A/c

Bad Debts A/c

Salaries Payable A/c

Tax Expense A/c

Dividends Payable A/c

Cash A/c

Insurance Paid 15000 Prepaid Insurance A/c 15000

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