FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

I need help with the items in red. I am trying to complete my adjusting entries sheet.

Cullumber Corporation's balance sheet at December 31, 2021, is presented below. Cash Inventory Prepaid insurance Equipment 2. 3. 4. 5. 6. 7. 8. 9. During 2022, the following transactions occurred. Cullumber uses a perpetual inventory system. 10. 1. Cullumber paid $2,400 interest on the bonds on January 1, 2022. Cullumber purchased $242,900 of inventory on account. Cullumber sold for $450,300 cash entory which cost $249,500. Cullumber also collected $27,018 sales taxes. 11. 1. CULLUMBER CORPORATION Balance Sheet December 31, 2021 $27,900 Accounts payable 27,000 Interest payable 5.900 Bonds payable Adjustment data: 2. 42,400 3. $103,200 Common stock Retained earnings $12,900 2,400 48,000 20,700 19,200 $103,200 Cullumber paid $231,800 on accounts payable. Cullumber paid $2,400 interest on the bonds on July 1, 2022. The prepaid insurance ($5,900) expired on July 31. On August 1, Cullumber paid $12,000 for insurance coverage from August 1, 2022, through July 31, 2023. Cullumber paid $25,900 sales taxes to the state. Paid other operating expenses, $86,800. Redeemed the bonds on December 31, 2022, by paying $46,080 plus $2,400 interest. Issued $86,200 of 8% bonds on December 31, 2022, at 103. The bonds pay interest every June 30 and December 31. Recorded the insurance expired from item 7. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $3,100 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.)
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Transcribed Image Text:Cullumber Corporation's balance sheet at December 31, 2021, is presented below. Cash Inventory Prepaid insurance Equipment 2. 3. 4. 5. 6. 7. 8. 9. During 2022, the following transactions occurred. Cullumber uses a perpetual inventory system. 10. 1. Cullumber paid $2,400 interest on the bonds on January 1, 2022. Cullumber purchased $242,900 of inventory on account. Cullumber sold for $450,300 cash entory which cost $249,500. Cullumber also collected $27,018 sales taxes. 11. 1. CULLUMBER CORPORATION Balance Sheet December 31, 2021 $27,900 Accounts payable 27,000 Interest payable 5.900 Bonds payable Adjustment data: 2. 42,400 3. $103,200 Common stock Retained earnings $12,900 2,400 48,000 20,700 19,200 $103,200 Cullumber paid $231,800 on accounts payable. Cullumber paid $2,400 interest on the bonds on July 1, 2022. The prepaid insurance ($5,900) expired on July 31. On August 1, Cullumber paid $12,000 for insurance coverage from August 1, 2022, through July 31, 2023. Cullumber paid $25,900 sales taxes to the state. Paid other operating expenses, $86,800. Redeemed the bonds on December 31, 2022, by paying $46,080 plus $2,400 interest. Issued $86,200 of 8% bonds on December 31, 2022, at 103. The bonds pay interest every June 30 and December 31. Recorded the insurance expired from item 7. The equipment was acquired on December 31, 2021, and will be depreciated on a straight-line basis over 5 years with a $3,100 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.)
+ Prepare the adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation 1. 2. 3. Insurance Expense Prepaid Insurance. (to adjust insurance expense) Depreciation Expense Accumulated Depreciation-Equipment (to adjust depreciation expense) Income Tax Expense Income Taxes Payable (to adjust income tax expense) Debit 5900 7860 28632 Credit 5900 7860 28632
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Transcribed Image Text:+ Prepare the adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation 1. 2. 3. Insurance Expense Prepaid Insurance. (to adjust insurance expense) Depreciation Expense Accumulated Depreciation-Equipment (to adjust depreciation expense) Income Tax Expense Income Taxes Payable (to adjust income tax expense) Debit 5900 7860 28632 Credit 5900 7860 28632
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