Reference no: EM132196218
Question - Bramble Corp.'s balance sheet at December 31, 2016, is presented below.
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BRAMBLE CORP. Balance Sheet December 31, 2016
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Cash
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$31,200
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Account payable
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$12,900
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Inventory
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30,300
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Interest payable
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2,455
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Prepaid insurance
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5,900
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Bonds payable
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49,100
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Equipment
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38,900
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Common stock
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26,600
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Retained earnings
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$15,245
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$106,300
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$106,300
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During 2017, the following transactions occurred. Bramble uses a perpetual inventory system.
1. Bramble paid $2,455 interest on the bonds on January 1, 2017.
2. Bramble purchased $243,400 of inventory on account.
3. Bramble sold for $483,000 cash inventory which cost $264,000. Bramble also collected $28,980 sales taxes.
4. Bramble paid $222,000 on accounts payable.
5. Bramble paid $2,455 interest on the bonds on July 1, 2017.
6. The prepaid insurance ($5,900) expired on July 31.
7. On August 1, Bramble paid $10,440 for insurance coverage from August 1, 2017, through July 31, 2018.
8. Bramble paid $16,000 sales taxes to the state.
9. Paid other operating expenses, $89,000.
10. Redeemed the bonds on December 31, 2017, by paying $47,400 plus $2,455 interest.
11. Issued $86,000 of 8% bonds on December 31, 2017, at 103. The bonds pay interest every June 30 and December 31.
Adjustment data:
12. Recorded the insurance expired from item 7.
13. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $3,000 salvage value.
14. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
Required -
Prepare journal entries for the transactions listed above and adjusting entries.
Prepare an adjusted trial balance at December 31, 2017.
Prepare an income statement for the year ending December 31, 2017.
Prepare a classified balance sheet as of December 31, 2017.