Balance SheetDecember 31, 2016Cash15,000Inventory15,375Prepaid Insurance2,800Equipment19,00052,175Total AssetsAccounts payableInterest payableBonds payable6,8751,25025,000Common stock12,500Retained earnings6,550Total Liabilities52,175During 2017, the following transactions occurred. Aimes uses a perpetual inventory system.1.) Patriots paid $1,250 interest on the bonds on January 1, 20172.) Patriots purchased 120,550 of inventory on account3.) Patriots sold for $240,000 cash inventory which cost $265,000. Aimes also collected $28,800 sales tax|4.) Patriots paid $115,000 on accounts payable.5.) Patriots paid $1,250 interest on the bonds on July 1, 2017.6.) The prepaid insurance ($2,800) expired on July 31.7.) On August 1, Aimes paid $5,100 for insurance coverage from August 1, 2017, through July 31, 2018.8.) Patriots paid $8,500 sales taxes to the state.9.) Paid other operating expenses, $45,500.10.) Redeemed the bonds on December 31, 2017, by paying $24,000 plus $1,250 interest.11.) Issued $45,000 of 8% bonds on December 31, 2017 at 103. The bonds pay interest every June 30 and December 31 Adjustment data:1.) Recorded the insurance expired from item 7.2.) The equipment was acquired on Devember 31, 2016, and will be depreciated on a straint-line basis over 5 years with a $3,000 salvage value.3.) The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) This needs to be included in your adjust trial balance.Instructions1.) Prepare T-Accounts to determine ending balances2.) Prepare journal entries for the transactions listed above and adjusting entries.3.) Prepare an adjusted trial balance at December 31, 2017.4.) Prepare an income statement and a retained earnings statement for the year ending December 31, 2017 and a classified balance sheet as of December 31, 2017.

Every organization has to prepare the financial statements at the end of accounting period. The…

g 2017, the following transactions occurred. Aimes uses a perpetual inventory system. triots paid $1,250 interest on the bonds on January 1, 2017 triots purchased 120,550 of inventory on account triots sold for $240,000 cash inventory which cost $265,000. Aimes also collected $28,800 sales tax triots paid $115,000 on accounts payable. triots paid $1,250 interest on the bonds on July 1, 2017. e prepaid insurance ($2,800) expired on July 31. August 1, Aimes paid $5,100 for insurance coverage from August 1, 2017, through July 31, 2018. triots paid S8 500 sales taves to the state

g 2017, the following transactions occurred. Aimes uses a perpetual inventory system. triots paid $1,250 interest on the bonds on January 1, 2017 triots purchased 120,550 of inventory on account triots sold for $240,000 cash inventory which cost $265,000. Aimes also collected $28,800 sales tax triots paid $115,000 on accounts payable. triots paid $1,250 interest on the bonds on July 1, 2017. e prepaid insurance ($2,800) expired on July 31. August 1, Aimes paid $5,100 for insurance coverage from August 1, 2017, through July 31, 2018. triots paid S8 500 sales taves to the state

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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