Markel Corporation's balance sheet at December 31, 2011, is presented below. During 2012, the following transactions occurred.1.
Question:
Markel Corporation's balance sheet at December 31, 2011, is presented below.
During 2012, the following transactions occurred.1. Markel paid $2,500 interest on the bonds on January 1, 2012.2. Markel purchased $241,100 of inventory on account.3. Markel sold for $480,000 cash inventory which cost $265,000. Markel also collected $28,800 sales taxes.4. Markel paid $230,000 on accounts payable.5. Markel paid $2,500 interest on the bonds on July 1, 2012.6. The prepaid insurance ($5,600) expired on July 31.7. On August 1, Markel paid $10,200 for insurance coverage from August 1, 2012, through July 31, 2013.8. Markel paid $17,000 sales taxes to the state.9. Paid other operating expenses, $91,000.10. Retired the bonds on December 31, 2012, by paying $48,000 plus $2,500 interest.11. Issued $90,000 of 8% bonds on December 31, 2012, at 103. The bonds pay interest every June 30 and December 31.Adjustment data:1. Recorded the insurance expired from item 7.2. The equipment was acquired on December 31, 2011, and will be depreciated on a straight-line basis over 5 years with a $3,000 salvage value.3. The income tax rate is 30%.Instructions(You may want to set up T accounts to determine ending balances.)(a) Prepare journal entries for the transactions listed above and adjusting entries.(b) Prepare an adjusted trial balance at December 31, 2012.(c) Prepare an income statement and a retained earnings statement for the year ending December 31, 2012, and a classified balance sheet as of December 31,2012.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso