The following information is available for Drake Company, which adjusts and closes its accounts every December 31: 1.Salaries accrued but unpaid total $2,840 on December 31.2.The $247 December utility bill arrived on December 31 and has not been paid or recorded.3.Buildings with a cost of $78,000, 25-year life, and $9,000 residual value are to be depreciated; equipment with a cost of $44,000, 8-year life, and $2,000 residual value is also to be depreciated. The straight-line method is to be used.4.A count of supplies indicates that the Store Supplies account should be reduced by $128 and the Office Supplies account reduced by $397 for supplies used during the year.5.The company holds a $6,000, 12% (annual rate), 6-month note receivable dated September 30, from a customer. The interest is to be collected on the maturity date.6.Bad debts expense is estimated to be 1% of annual sales. Sales total $65,000.7.An analysis of the company insurance policies indicates that the Prepaid Insurance account is to be reduced for $528 of expired insurance.8.A review of travel expense reports indicates that $310 has been paid for airfare for a salesperson (and recorded as Travel Expenses), but has not yet been used.9.The income tax rate is 30% on current income and will be paid in the first quarter of next year. The pretax income of the company before adjustments is $18,270.

Financial transactions are initially recorded in the form of journal entry.

Answered: The following information is available…

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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The following information is available for Drake Company, which adjusts and closes its accounts every December 31:

1.	Salaries accrued but unpaid total $2,840 on December 31.
2.	The $247 December utility bill arrived on December 31 and has not been paid or recorded.
3.	Buildings with a cost of $78,000, 25-year life, and $9,000 residual value are to be depreciated; equipment with a cost of $44,000, 8-year life, and $2,000 residual value is also to be depreciated. The straight-line method is to be used.
4.	A count of supplies indicates that the Store Supplies account should be reduced by $128 and the Office Supplies account reduced by $397 for supplies used during the year.
5.	The company holds a $6,000, 12% (annual rate), 6-month note receivable dated September 30, from a customer. The interest is to be collected on the maturity date.
6.	Bad debts expense is estimated to be 1% of annual sales. Sales total $65,000.
7.	An analysis of the company insurance policies indicates that the Prepaid Insurance account is to be reduced for $528 of expired insurance.
8.	A review of travel expense reports indicates that $310 has been paid for airfare for a salesperson (and recorded as Travel Expenses), but has not yet been used.
9.	The income tax rate is 30% on current income and will be paid in the first quarter of next year. The pretax income of the company before adjustments is $18,270.

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