Raymond Company's trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described shown below.
|
|
Debit
|
Credit
|
|
Cash
|
$28,000
|
|
|
Accounts receivable
|
36,000
|
|
|
Notes receivable
|
10,000
|
|
|
Interest receivable
|
0
|
|
|
Inventory
|
36,200
|
|
|
Prepaid insurance
|
4,400
|
|
|
Land
|
20,000
|
|
|
Buildings
|
160,000
|
|
|
Equipment
|
60,000
|
|
|
Patents
|
8,000
|
|
|
Allowances for doubtful accounts
|
|
300
|
|
Accumulated depreciation-Buildings
|
|
49,000
|
|
Accumulated depreciation-Equipment
|
|
24,000
|
.......and so on........
1. On May 1, 2014, Raymond purchased equipment for $13,000 plus sales taxes of $780 (all paid in cash).
2. On July 1, 2014, Raymond sold for $3,500 equipment which originally cost $5,000.
Accumulated depreciation on this equipment at January 1, 2014, was $1,800; 2014 depreciation prior to the sale of the equipment was $450.
3. On December 31, 2014, Raymond sold for $9,400 on account inventory that cost $6,600.
4. Raymond estimates that uncollectible accounts receivable at year-end is $4,000.
5. The note receivable is a one-year, 8% note dated April 1, 2014. No interest has been recorded.
6. The balance in prepaid insurance represents payment of a $4,400 6-month premium on October 1, 2014.
7. The building is being depreciated using the straight-line method over 40 years. The salvage value is $20,000.
8. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
9. The equipment purchased on May 1, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,000.
10. The patent was acquired on January 1, 2014, and has a useful life of 10 years from that date.
11. Unpaid salaries and wages at December 31, 2014, total $2,200.
12. The unearned rent revenue of $6,000 was received on December 1, 2014, for 4 months rent.
13. Both the short-term and long-term notes payable are dated January 1, 2014, and carry a 9% interest rate. All interest is payable in the next 12 months.
14. Income tax expense was $17,000. It was unpaid at December 31.
Instructions
(a) Prepare journal entries for the transactions listed above.
(b) Prepare an updated December 31, 2014, trial balance.
(c) Prepare a 2014 income statement and a 2014 retained earnings statement.
(d) Prepare a December 31, 2014, classified balancesheet.