Raymond Company’s trial balance at December 31, 2014, is presented below.

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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.

    • 8 years ago
    Raymond Company’s trial balance at December 31, 2014, is presented below.
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