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Exercise 7-21B Complete the accounting cycle using long-term asset transactions (LO7-4, 7-7)

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On January 1, Year 1, the general ledger of a company includes the following account balances:
  

Accounts	Debit				Credit
Cash	$	59,100
Accounts Receivable		25,800
Allowance for Uncollectible Accounts					$	2,600
Inventory		36,700
Notes Receivable (5%, due in 2 years)		16,800
Land		159,000
Accounts Payable						15,200
Common Stock						224,000
Retained Earnings						55,600
Totals	$	297,400			$	297,400

  
During January Year 1, the following transactions occur:
  

January		1		Purchase equipment for $19,900. The company estimates a residual value of $1,900 and a five-year service life.
January		4		Pay cash on accounts payable, $9,900.
January		8		Purchase additional inventory on account, $86,900.
January		15		Receive cash on accounts receivable, $22,400.
January		19		Pay cash for salaries, $30,200.
January		28		Pay cash for January utilities, $16,900.
January		30		Sales for January total $224,000. All of these sales are on account. The cost of the units sold is $117,000.

Information for adjusting entries:

1. Depreciation on the equipment for the month of January is calculated using the straight-line method.
2. The company estimates future uncollectible accounts. The company determines $3,400 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
3. Accrued interest revenue on notes receivable for January.
4. Unpaid salaries at the end of January are $33,000.
5. Accrued income taxes at the end of January are $9,400.

rev: 11_22_2018_QC_CS-148298, 06_13_2019_QC_CS-170054

Exercise 7-21B Part 3

3. Prepare an adjusted trial balance as of January 31, Year 1.

Answer 1

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General ledger
Adjusted Trial Balance
Account Titles	Debit $	Credit $
Cash	4,600.00
Accounts Receivable	227,400.00
Allowance for Uncollectible Accounts		8,420.00
Inventory	6,600.00
Notes Receivable (5%, due in 2 years)	16,800.00
Land	159,000.00
Accounts Payable		92,200.00
Common Stock		224,000.00
Retained Earnings		55,600.00
Equipment	19,900.00
Salaries Expense	63,200.00
Utilities Expense	16,900.00
Sales		224,000.00
Cost of goods sold	117,000.00
Depreciation Expense- Equipment	300.00
Accumulated Depreciation- Equipment		300.00
Bad debt Expense	5,820.00
Interest Revenue		70.00
Interest Receivable	70.00
Salaries Payable		33,000.00
Income tax expense	9,400.00
Income tax Payable		9,400.00
Totals	646,990.00	646,990.00