Reference no: EM132721746
Question - At December 31, 2017, Bob Industrial Corporation (BIL) has the following unadjusted trial balance:
Cash $43,200
Accounts Receivable 79,000
Allowance for Doubtful Accounts $2,500
Merchandise Inventory 54,720
Prepaid Rent 28,000
Investment in Pecan Corp. Bonds 70,000
Plant and Equipment 135,000
Accumulated Depreciation 10,740
Accounts Payable 11,370
Bonds Payable 95,000
Common Shares 170,000
Retained Earnings 97,180
Sales Revenue 225,555
Cost of Goods Sold 154,400
Transportation-Out 11,000
Salaries and Wages Expense 36,500
Interest Expense 2,040
Rent Revenue 16,000
Miscellaneous Expense 6985
Insurance Expense 7,500
$628,345 $628,345
Additional data:
1. The balance in the Insurance Expense account contains the premium costs of three policies:
Policy 1, remaining cost of $2,550, 1-yr. term, effective June 1, 2016;
Policy 2, original cost of $2,700, 3-yr. term, effective Oct. 1, 2017;
Policy 3, original cost of $2,250, 1-yr. term, effective Mar. 1, 2017
2. On August 31, 2017, BIL received $16,000 as prepaid rent from a lessee for an 20-month lease beginning on that date, which was credited to the Rent Revenue account.
3. All depreciable assets are depreciated at 10% per year. However, any acquisitions and disposals during the year are depreciated at half this rate. There were no acquisitions of PPE during 2017. On December 31, 2017, the balance in the Plant and Equipment account was $230,000.
4. On December 28, 2017, the bookkeeper incorrectly debited Sales Revenue and credited A/R for a receipt on account from a regular customer of $10,000.
5. At December 31, 2017, salaries accrued but unpaid were $4,500.
6. Based upon an aging of the accounts, Hazelnut estimates that 5% of the Accounts Receivable balance on December 31, 2017 will become uncollectible.
7. On October 1, 2017, BIL purchased, as a temporary investment, $70,000, 6% bonds of XYZ Corp. at par. The bonds mature on August 1, 2020. Interest payment dates are July 31 and January 31.
8. On April 30, 2017, BIL rented a warehouse for $2,000 per month, paying $24,000 in advance.
Required - For the above additional information provided, record the necessary correcting and adjusting entries?