Reference no: EM131196260
The below table 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.
2) Depreciation expense for the year was $35,000.
3) Baker issued gift cards in 2014 as part of a special promotion. $60,000 in gift cards expired on December 31, 2015.
4) A physical count of supplies indicated that $30,000 was on hand at the end of the year.
5) Baker employees earned wages of $20,000 for working 4 days at the end of the year. The wages will be paid in January.
6) Baker issued a $150,000 three-year note on September 1. The interest on the note is 10%. Interest is paid semi-annually.
7) A physical count of merchandise inventory indicated that $105,000 was on hand at the end of the year.
8) The income tax rate is 40%
Required:
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.
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Unadjusted Trial Balance
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AJE#
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Adjustments
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Adjusted Trial Balance
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Unadjusted
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Debit
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Credit
|
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Debit
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Credit
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Debit
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Credit
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Cash
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225,000
|
|
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Short term investments
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100,000
|
|
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Accounts receivable
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120,000
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Merchandise inventory
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120,000
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|
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Prepaid insurance
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160,000
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|
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Supplies
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40,000
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|
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Property and equipment
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1,135,000
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|
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Acc. depreciation
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150,000
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Long-term investments
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300,000
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|
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Accounts payable
|
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200,000
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Unearned revenue
|
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125,000
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Notes payable
|
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320,000
|
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Common Stock
|
|
100,000
|
|
Additional paid-in capital
|
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900,000
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Retained earnings
|
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720,000
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Sales revenue
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1,100,000
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Cost of goods sold
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690,000
|
|
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Advertising expense
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85,000
|
|
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Depreciation expense
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50,000
|
|
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Insurance expense
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40,000
|
|
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Wages expense
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550,000
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|
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Total
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$3,615,000
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$3,615,000
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