Reference no: EM132998838
Hawkeye Corporation's balance sheet at December 31, 2019, is presented below.
HAWKEYE CORPORATION Balance Sheet
December 31, 2019
Cash $24,600
Accounts payable $25,600
Accounts receivable 45,500
Common stock ($10 par) 80,000
Allowance for doubtful accounts (1,500)
Retained earnings 127,400
Supplies 4,400
Land 40,000
Buildings 142,000
Accumulated depreciation-buildings (22,000)
$233,000
During 2020, the following transactions occurred.
1. On January 1, 2020, Hawkeye issued 1,200 shares of $40 par, 7% preferred stock for $49,200.
2. On January 1, 2020, Hawkeye also issued 900 shares of the $10 par value common stock for $21,000.
3. Hawkeye performed services for $320,000 on account.
4. On April 1, 2020, Hawkeye collected fees of $36,000 in advance for services to be performed from April 1, 2020, to March 31, 2021.
5. Hawkeye collected $276,000 from customers on account.
6. Hawkeye bought $35,100 of supplies on account.7.Hawkeye paid $32,200 on accounts payable.
8. Hawkeye reacquired 400 shares of its common stock on June 1, 2020, for $28 per share.
9. Paid other operating expenses of $188,200.
10. On December 31, 2020, Hawkeye declared the annual preferred stock dividend and a $1.2 per share dividend on the outstanding common stock, all payable on January 15, 2021.
11. An account receivable of $1,700 which originated in 2019 is written off as uncollectible.
Adjustment data:
1. A count of supplies indicates that $5,900 of supplies remain unused at year-end.
2. Recorded revenue from item 4 above.
3. The allowance for doubtful accounts should have a balance of $3,500 at year end.
4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000.
5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
Problem 1: Prepare journal entries for the transactions listed above and adjusting entries.
Problem 2: Prepare an adjusted trial balance at December 31, 2020.