The following list of accounts and their balances represents the unadjusted trial balance of Alt Company at
Question:
The following list of accounts and their balances represents the unadjusted trial balance of Alt Company at December 31, 2018:
| Cash | $25,490 | |
| Equity Investments (trading) | $60,000 | |
| Accounts Receivable | $69,000 | |
| Allowance for Doubtful Accounts | $500 | |
| Inventory | $54,720 | |
| Prepaid Rent | $36,000 | |
| Plant Assets | $160,000 | |
| Accumulated Depreciation-Plant Assets | $14,740 | |
| Accounts Payable | $11,370 | |
| Bonds Payable | $90,000 | |
| Common Stock | $170,000 | |
| Retained Earnings | $97,180 | |
| Sales Revenue | $214,800 | |
| Cost of Goods Sold | $154,400 | |
| Freight-Out | $11,000 | |
| Salaries and Wages Expense | $32,000 | |
| Interest Expense | $2,040 | |
| Rent Revenue | $21,600 | |
| Miscellaneous Expense | $890 | |
| Insurance Expense | $14,650 | |
| $620,190 | $620,190 |
Additional Data:
The balance in the Insurance Expense account contains the premium costs of three policies:
Policy 1, remaining cost of $2,550, 1-yr. term, taken out on May 1, 2017;
Policy 2, original cost of $10,800, 3-yr. term, taken out on Oct. 1, 2018;
Policy 3, original cost of $1,300, 1-yr. term, taken out on Jan. 1, 2018.
On September 30, 2018, Alt received $21,600 rent from its lessee for an eighteen month lease beginning on that date.
The regular rate of depreciation is 8% per year. Acquisitions and retirements during a year are depreciated at half this rate. There were no purchases during the year. On December 31, 2017, the balance of the Plant and Equipment account was $220,000.
On December 28, 2018, the bookkeeper incorrectly credited Sales Revenue for a receipt on account in the amount of $20,000.
At December 31, 2018, salaries and wages accrued but unpaid were $4,200.
Alt estimates that 2% of gross accounts receivable will become uncollectible.
On August 1, 2018, Alt purchased, as a short-term investment, 60 $1,000, 5% bonds of Allen Corp. at par. The bonds mature on August 1, 2019. Interest payment dates are July 31 and January 31.
On April 30, 2018, Alt rented a warehouse for $3,000 per month, paying $36,000 in advance.
Instructions
Record the necessary correcting and adjusting entries.
Indicate which of the adjusting entries may be reversed at the beginning of the next accounting period.
Expert Answer:
Below are the adjusting entries for insurance expenses Policy 1 Note 1 For Insurance policy1 ... View the full answer
