Reference no: EM132995953

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 (a) Prepare journal entries for the transactions listed above and adjusting entries.