Prepare journal entries and adjusting journal entries ONLY for the transactions listed below (Everything needed is included in the question, please SHOW YOUR WORK: 3. Teal Mountain sold for $864,000 cash inventory which cost $475,200. Teal Moutain also collected $51,840 in sales taxes. Cash                            (answer is not 865,840) Sales Revenue                                                     864,000 (correct) Sales Taxes Payable                                        (answer is not 1,840)   Adjusting Entries: Adj 1.  Recorded the insurance expired from item 7. (Item 7: On August 1, Teal Mountain paid $18,360 for insurance coverage from August 1, 2025, through July 31, 2026. Insurance Expense             (answer is not 4,200) Income Taxes Payable                                              (answer is not 4,200)   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) Income Tax Expense                   (answer is not 59,496) Income Taxes Payable                                                  (answer is not 59,496)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Prepare journal entries and adjusting journal entries ONLY for the transactions listed below (Everything needed is included in the question, please SHOW YOUR WORK:

3. Teal Mountain sold for $864,000 cash inventory which cost $475,200. Teal Moutain also collected $51,840 in sales taxes.

Cash                            (answer is not 865,840)

Sales Revenue                                                     864,000 (correct)

Sales Taxes Payable                                        (answer is not 1,840)

 

Adjusting Entries:

Adj 1.  Recorded the insurance expired from item 7. (Item 7: On August 1, Teal Mountain paid $18,360 for insurance coverage from August 1, 2025, through July 31, 2026.

Insurance Expense             (answer is not 4,200)

Income Taxes Payable                                              (answer is not 4,200)

 

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)

Income Tax Expense                   (answer is not 59,496)

Income Taxes Payable                                                  (answer is not 59,496)

 

 

 

 

Adjustment data:
1.
2.
3.
Recorded the insurance expired from item 7.
The equipment was acquired on December 31, 2024, and will be depreciated on a straight-line basis over 5 years with a $5,500 salvage value.
The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
Transcribed Image Text:Adjustment data: 1. 2. 3. Recorded the insurance expired from item 7. The equipment was acquired on December 31, 2024, and will be depreciated on a straight-line basis over 5 years with a $5,500 salvage value. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
Cash
D
Inventory
Prepaid insurance
Equipment
N
2.
3.
During 2025, the following transactions occurred. Teal Mountain uses a perpetual inventory system.
4.
5.
1. Teal Mountain paid $4,500 interest on the bonds on January 1, 2025.
Teal Mountain purchased $433,980 of inventory on account.
Teal Mountain sold for $864,000 cash inventory which cost $475,200. Teal Mountain also collected $51,840 sales taxes.
Teal Mountain paid $414,000 on accounts payable.
Teal Mountain paid $4,500 interest on the bonds on July 1, 2025.
The prepaid insurance ($10,080) expired on July 31.
On August 1, Teal Mountain paid $18,360 for insurance coverage from August 1, 2025, through July 31, 2026.
Teal Mountain paid $30,600 sales taxes to the state.
Paid other operating expenses, $163,800.
Redeemed the bonds on December 31, 2025, by paying $86,400 plus $4,500 interest.
Issued $162,000 of 8%, 10-year bonds on December 31, 2025, at 103. The bonds pay interest every June 30 and December 31.
6.
7.
8.
9.
real
10.
Balance Sheet
December 31, 2024
$54,000 Accounts payable
55,350 Interest payable
Bonds payable
Common stock
Retained earnings
11.
10,080
68,400
$187,830
$24,750
4,500
90,000
45,000
$23,580
$187.830
Transcribed Image Text:Cash D Inventory Prepaid insurance Equipment N 2. 3. During 2025, the following transactions occurred. Teal Mountain uses a perpetual inventory system. 4. 5. 1. Teal Mountain paid $4,500 interest on the bonds on January 1, 2025. Teal Mountain purchased $433,980 of inventory on account. Teal Mountain sold for $864,000 cash inventory which cost $475,200. Teal Mountain also collected $51,840 sales taxes. Teal Mountain paid $414,000 on accounts payable. Teal Mountain paid $4,500 interest on the bonds on July 1, 2025. The prepaid insurance ($10,080) expired on July 31. On August 1, Teal Mountain paid $18,360 for insurance coverage from August 1, 2025, through July 31, 2026. Teal Mountain paid $30,600 sales taxes to the state. Paid other operating expenses, $163,800. Redeemed the bonds on December 31, 2025, by paying $86,400 plus $4,500 interest. Issued $162,000 of 8%, 10-year bonds on December 31, 2025, at 103. The bonds pay interest every June 30 and December 31. 6. 7. 8. 9. real 10. Balance Sheet December 31, 2024 $54,000 Accounts payable 55,350 Interest payable Bonds payable Common stock Retained earnings 11. 10,080 68,400 $187,830 $24,750 4,500 90,000 45,000 $23,580 $187.830
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