Prepare an income statement for 2014

Assignment Help Financial Accounting

Reference no: EM13171147

Part I

Presented below are the trial balance and the other information related to Josephine Gray, a tax consultant.

1. Fees received in advance from clients $6,000.

2. Services performed for clients that were not recorded by December 31, $4,900.

3. Bad debt expense for the year is $1,430.

JOSEPHINE GRAY, CONSULTING ENGINEER Trial Balance December 31, 2014
	Debit	Credit
Cash	$ 29,500
Accounts Receivable	49,600
Allowance for Doubtful Accounts		$ 750
Engineering Supplies Inventory	1,960
Prepaid Insurance	1,100
Furniture and Equipment	25,000
Accumulated Depreciation - Furniture and Equipment		6,250
Notes Payable		7,200
Josephine Gray, Capital		35,010
Service Revenue		100,000
Rent Expense	9,750
Office Salaries Expense	30,500
Heat, Light, and Water Expense	1,080
Miscellaneous Office Expense	720
	$149,210	$149,210

1. Fees received in advance from clients $6,000.

2. Services performed for clients that were not recorded by December 31, $4,900.

3. Bad debt expense for the year is $1,430.

4. Insurance expired during the year $480.

5. Furniture and equipment is being depreciated at 10% per year.

6. Josephine Gray gave the bank a 90-day, 10% note for $7,200 on December 1, 2014.

7. Rent of the building is $750 per month. The rent for 2014 has been paid, as has that for January 2015.

8. Office salaries earned but unpaid December 31, 2014, $2,510.

Instructions:

(a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2014. (Omit explanations.)

(b) Prepare an income statement for 2014 and a classified balance sheet.

Part II

On September 1, 19X1, Golf Company sold and issued to Youngblood Company $60,000, 5-year, 9% coupon annual interest rate (payable semiannually) bonds for a price that would yield the market annual rate of interest of 8%. The bonds were dated July 1, 19X1, and interest is payable each June 30 and December 31. The accounting period for Golf ends on December 31.

A. Record the cash price at September 1, and the journal entries for issuance and the first 2 interest periods.

B. Assume Golf Company bought back the bonds and retired them after the second interest period when the market annual interest rate is 10%. Calculate the buyback and record the journal entry.

Reference no: EM13171147

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