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At the top of the following page is the trial balance for Bou Dr eaux Company as of December 31 Consider the following additional information Bou Dr.eaux uses a perpetual

At the top of the following page is the trial balance for Bou Dr.eaux Company as of December 31.

Consider the following additional information:

(a) Bou Dr.eaux uses a perpetual inventory system.

(b) The prepaid expenses were paid on September 1 and relate to a 3-year insurance policy that went into effect on September 1.

(c) The unearned revenue relates to rental of an unused portion of the corporate offices. The $42,000 was received on April 1 and represents payment in advance for one year’s rental.

(d) Plant and Equipment includes $15,000 for routine equipment repairs that were erroneously recorded as equipment purchases. The repairs were made on December 30.

 

Debit

Credit

Cash                           

$ 72,000

 

Accounts Receivable                

365,000

 

Inventory                        

52,000

 

Prepaid Expenses                  

36,000

 

Land                           

70,000

 

Plant and Equipment                

1,254,000

 

Other Assets                     

1,275,000

 

Accounts Payable                  

 

$ 154,000

Wages, Interest, and Taxes Payable      

 

218,000

Unearned Revenue                 

 

42,000

Long-Term Debt                   

 

1,190,000

Other Liabilities                   

 

297,000

Common Stock                   

 

195,000

Retained Earnings                  

 

915,000

Dividends                        

211,000

 

Sales                           

 

2,762,000

Interest Revenue                   

 

29,000

Costs of Goods Sold               

1,565,000

 

Selling, General, and Administrative Expenses

615,000

 

Interest Expense                   

82,000

 

Income Tax Expense                

205,000

 

Totals                         

$5,802,000

$5,802,000

(e) Other Assets include $7,000 for miscellaneous office supplies, which were purchased in mid-October. An end-of-year count reveals that only $4,200 of the office supplies remain.

(f) Selling, General, and Administrative Expenses incorrectly includes $13,000 for office furniture purchases (Other Assets). The purchases were made on December 30.

(g) Inventory erroneously includes $7,500 of inventory that Bou Dr.eaux had purchased on account but that was returned to the supplier on December 28 because of unsatisfactory quality.

1. Record the entries necessary to adjust the books.

2. Record the entries necessary to close the books. Assume the adjustments in (1) do not affect Income Tax Expense.

3. Prepare a post-closing trial balance.

May 14 2020 View more View Less

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