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Adjusting Entries Clapton Guitar Company entered into the following transactions during the war. (The transactions were properly recorded in permanent (balance sheet) accounts unless otherwise indicated.) On December 31, the following additional information is available: 1. Property taxes for the current year are due to be paid by April 1 of next year. The company has not paid or recorded its $2,300 property taxes for the current year. 2. The $302 December utility bill has not been recorded or paid. 3. Salaries accrued but not paid total $927. 4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by company personnel. 5. The Office Supplies account had a balance of $129 on January 1. A physical count on December 31 showed $174 of office supplies on hand. 6. On January 1, the Buildings account and the Store Equipment account had balances of $100,000 and $65,000, respectively. The buildings are expected to have a 20-year useful life and an $8,000 residual value, while the store equipment is expected to have a 10-year life and a $2,000 residual value. They are being depreciated using the straight-line method. 7. The income tax rate is 30% on current income and is payable in the first quarter of next year. The pretax income of the company before adjustments is $27,749. Required: On the basis of the preceding information, prepare journal entries to adjust Clapton’s books as of December 31. Each entry explanation should include supporting computations. (Round to the nearest dollar.)

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 3, Problem 2P
Textbook Problem

Adjusting Entries Clapton Guitar Company entered into the following transactions during the war. (The transactions were properly recorded in permanent (balance sheet) accounts unless otherwise indicated.)

Chapter 3, Problem 2P, Adjusting Entries Clapton Guitar Company entered into the following transactions during the war.

On December 31, the following additional information is available:

  1. 1. Property taxes for the current year are due to be paid by April 1 of next year. The company has not paid or recorded its $2,300 property taxes for the current year.
  2. 2. The $302 December utility bill has not been recorded or paid.
  3. 3. Salaries accrued but not paid total $927.
  4. 4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by company personnel.
  5. 5. The Office Supplies account had a balance of $129 on January 1. A physical count on December 31 showed $174 of office supplies on hand.
  6. 6. On January 1, the Buildings account and the Store Equipment account had balances of $100,000 and $65,000, respectively. The buildings are expected to have a 20-year useful life and an $8,000 residual value, while the store equipment is expected to have a 10-year life and a $2,000 residual value. They are being depreciated using the straight-line method.
  7. 7. The income tax rate is 30% on current income and is payable in the first quarter of next year. The pretax income of the company before adjustments is $27,749.

Required:

On the basis of the preceding information, prepare journal entries to adjust Clapton’s books as of December 31. Each entry explanation should include supporting computations. (Round to the nearest dollar.)

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Chapter 3 Solutions

Intermediate Accounting: Reporting And Analysis
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