Determine tax effect on unrealized gains and losses

Assignment Help Accounting Basics

Reference no: EM131761161

Question:

Need help on these adjusting entries please.	Unadjusted				Adjusted
Account Title	Trial Balance		Adjustments		Trial Balance
	DR	CR	DR	CR	DR	CR
Cash	240,300	-
Accounts Receivable	925,000	-
Allowance for Doubtful Accounts	-	49,000
Interest Receivable	-
Merchandise Inventory	187,500	-
Prepaid Insurance	9,000	-
Prepaid Advertising	-	-
Prepaid Rent	-	-
Office Supplies	7,800	-
Note Receivable	75,000	-
Available for Sale Securities	380,000	-
Office Building	4,250,000	-
Accumulated Depreciation - Office Building	-	221,500
Storage Building	1,650,000	-
Accumulated Depreciation - Storage Building	-	-
Land	450,000	-
Leasehold Improvements	190,000	-
Accumulated Depreciation - Leasehold Improvements	-	-
Office Equipment	125,000	-
Accumulated Depreciation - Office Equipment	-	42,000
Patent	250,000	-
Accounts Payable	-	145,000
Sales Tax Payable	-	-
Salaries Payable	-	-
Payroll Taxes Payable	-	-
Interest Payable	-	-
Income Tax Payable	-	-
Unearned Rent Revenue	-	96,000
Loan Payable - Onstar Bank	-	500,000
Loan Payable - Coldstar Bank	-	2,250,000
Common Stock	-	425,000
Additional Paid in Capital	-	2,800,000
Retained Earnings	-	1,379,420
Accumulated Other Comprehensive Income	-	8,500
Dividends	280,000	-
Sales	-	4,380,250
Sales Returns and Allowances	19,500	-
Sales Discounts	14,600	-
Cost of Goods Sold	1,817,900	-
Sales Salaries Expense	676,400	-
Office Salaries Expense	434,000	-
Advertising Expense	54,000	-
Depreciation Expense - Office Building	-	-
Depreciation Expense - Leasehold Improvements	-	-
Depreciation Expense - Office Equipment	-	-
Leasing Expense - Stores	132,000	-
Miscellaneous Selling Expense	16,950	-
Rent Expense - Storage Facility	18,000	-
Insurance Expense	2,000	-
Office Supplies Expense	28,500	-
Warranty Expense	5,000
Miscellaneous Administrative Expense	9,220	-
Rent Revenue	-	-
Interest Revenue on Note Receivable	-	-
Dividend Revenue on AFS Securities	-	18,000
Bad Debt Expense	67,000	-
	12,314,670	12,314,670

1. On December 1, 2017 DeeDee paid ABC Advertising $16,000 for a four month campaign of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed.

2. On August 1, 2017, DeeDee rented a portion of one store to Marketing Majors Inc. The contract was for 19 (enter the last digit of your student number) months and DeeDee required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.

3. As of 12/31/2017 the Available for Sale Securities have a fair value of $291,000 (enter the last digit of your student number in place of the X). Due to the market conditions, the company does not plan on selling the assets in 2017, but their intent is to sell at some point in time. You can ignore the tax effect on unrealized gains and losses. (Hint: Unrealized Gains and Losses are closed to Accumulated Other Comprehensive Income at the end of the year.)

4. DeeDee uses the DDB method to depreciate office equipment. No office equipment was added during 2017. It is estimated that the office equipment has a useful life of 10 years with a salvage value of $2,000. Prior depreciation was correctly calculated based on period of time held.

Reference no: EM131761161

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