The following account balances pertain to the Jasper Manufacturing Co. at December 31, 20X3 (before adjusting entries).

	Debit	Credit
Cash ................................................................................	$300,000
Prepaid Insurance .............................................................	50,000
Land ................................................................................	400,000
Accounts Payable .............................................................		30,000
Common Stock .................................................................		250,000
Retained Earnings .............................................................		150,000
Service Revenue ...............................................................		650,000
Wages Expense .................................................................	150,000
Rent Expense ...................................................................	180,000
Total ................................................................................	$1,080,000	$1,080,000

Additional information:

(a)	Prepaid insurance in the trial balance represents an advance payment for 5 months of insurance made on November 1, 20X3.
(b)	In July, the accountant debited accounts payable for a $10,000 fine for a pollution violation; “Environmental Expense” should have been debited.
(c)	Rent expense in the trial balance represents an advance payment for 6 months rent paid on October 1, 20X3. The Company begins occupying the property on that date.
(d)	Unpaid and unrecorded wages earned by employees at December 31, 20X3, were $60,000.
(e)	Accrue income taxes for 20X3 at 30% on pretax income.

Required:

(1) Prepare to adjust entries to Jasper Co.'s accounts at December 31, 20X3. Each entry should be made in general journal format. Identify each entry by using the letter of the paragraph containing the additional information for the entry.

(2) Prepare the current year's income statement

(3) Prepare the current year balance sheet.

(4) Prepare the closing entries.

Answer rating: 100% (QA)

1Adjusting Journal Entries Date Accounts Titles and explanation Insurance Expense Prepa... View the full answer