Arrange journal entries for the transactions

Assignment Help Financial Accounting

Reference no: EM135953

Ber Corporation's balance sheet at 31^st December, 2010, is shown below.

COMPREHENSIVE PROBLEMS

ABER CORPORATION

Balance Sheet

December 31, 2010

Cash $30,500 Accounts payable $13,750

Inventory 25,750 Bond interest payable 3,000

Prepaid insurance 5,600 Bonds payable 50,000

Equipment 38,000 Common stock 20,000

$99,850 Retained earnings $13,100

$99,850

During 2011, the subsequent transactions occurred.

1. Aber paid $3,000 interest on the bonds on 1^st January, 2011.

2. Aber purchased $241,100 of inventory on account.

3. Aber sold for $450,000 cash inventory which cost $250,000.Aber also collected $27,000 sales taxes.

4. Aber paid $230,000 on accounts payable.

5. Aber paid $3,000 interest on the bonds on 1^st July, 2011.

6. The prepaid insurance ($5,600) expired on 31^st July.

7. On August 1, Aber paid $10,200 for insurance coverage from August 1,2011,through 31^st July,2012.

8. Aber paid $17,000 sales taxes to the state.

9. Paid other operating expenses, $91,000.

10. Retired the bonds on 31^st December, 2011, by paying $48,000 plus $3,000 interest.

11. Issued $90,000 of 8% bonds on 31^st December, 2011, at 104. 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 on 31^st December, 2010, and may be depreciated on a straight-line basis over 5 years with a $3,000 salvage value.

3. The income tax rate is 30 percent.

Instructions

(a) Arrange journal entries for the transactions listed above and adjusting entries.

(b) Arrange an adjusted trial balance at 31^st December, 2011.

(c) Arrange an income statement and a retained earnings statement for the year ending December 31, 2011, and a classified balance sheet as of 31^st December, 2011.

(b) Totals $646,995

Reference no: EM135953

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