Question

Whispering Winds Corp.’s unadjusted trial balance at December 1, 2017, is presented below. Debit Credit Cash $25,600 Accounts Receivable 36,200 Notes Receivable 8,900 Interest Receivable 0 Inventory 36,030 Prepaid Insurance 3,900 Land 21,000 Buildings 136,500 Equipment 61,500 Patent 9,000 Allowance for Doubtful Accounts $450 Accumulated Depreciation—Buildings 45,500 Accumulated Depreciation—Equipment 24,600 Accounts Payable 27,300 Salaries and Wages Payable 0 Notes Payable (due April 30, 2018) 12,600 Income Taxes Payable 0 Interest Payable 0 Notes Payable (due in 2023) 35,600 Common Stock 51,400 Retained Earnings 17,180 Dividends 13,000 Sales Revenue 942,000 Interest Revenue 0 Gain on Disposal of Plant Assets 0 Bad Debt Expense 0 Cost of Goods Sold 636,500 Depreciation Expense 0 Income Tax Expense 0 Insurance Expense 0 Interest Expense 0 Other Operating Expenses 61,000 Amortization Expense 0 Salaries and Wages Expense 107,500 Total $1,156,630 $1,156,630 The following transactions occurred during December. Dec. 2 Purchased equipment for $18,000, plus sales taxes of $600 (paid in cash). 2 Sheffield sold for $3,550 equipment which originally cost $5,100. Accumulated depreciation on this equipment at January 1, 2017, was $1,900; 2017 depreciation prior to the sale of equipment was $430. 15 Sheffield sold for $5,500 on account inventory that cost $3,450. 23 Salaries and wages of $6,730 were paid. Adjustment data: 1. Sheffield estimates that uncollectible accounts receivable at year-end are $4,030. 2. The note receivable is a one-year, 8% note dated April 1, 2017. No interest has been recorded. 3. The balance in prepaid insurance represents payment of a $3,900, 6-month premium on September 1, 2017. 4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $32,700. 5. 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. 6. The equipment purchased on December 2, 2017, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,280. 7. The patent was acquired on January 1, 2017, and has a useful life of 9 years from that date. 8. Unpaid salaries at December 31, 2017, total $2,120. 9. Both the short-term and long-term notes payable are dated January 1, 2017, and carry a 10% interest rate. All interest is payable in the next 12 months. 10 Income tax expense was $12,100. It was unpaid at December 31. (a) Your answer is partially correct. Try again. Prepare journal entries for the transactions listed above and adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record depreciation expense on equipment.) (To record sale of equipment.) (To record sales revenue.) (To record cost of goods sold.) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Click if you would like to Show Work for this question: Open Show Work Show List of Accounts Show Solution Show Answer Link to Text Attempts: 3 of 3 used (b) Prepare an adjusted trial balance at December 31, 2017. WHISPERING WINDS CORP. Adjusted Trial Balance Debit Credit $ $ Totals $ $

Answer 1

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Date	Account	Debit	Credit
Dec 2	Equipment	$ 18,600
Dec 2	Cash		$ 18,600
Dec 2	Depreciation Expense	$        430
Dec 2	Accumulated Deprciation		$        430
	(to record for the year dep on sold equipment)
Dec 2	Cash	$    3,550
Dec 2	Accumulated Deprciation	$    2,330		1900+430
Dec 2	Gain on Sale of Equipment		$        780
Dec 2	Equipment		$    5,100
Dec 15	Accounts Receivable	$    5,500
Dec 15	Sales		$    5,500
Dec 15	Cost of Goods Sold	$    3,450
Dec 15	Inventory		$    3,450
Dec 23	Salaries and Wages Expense	$    6,730
Dec 23	Cash		$    6,730
Adjusting Entries:
Dec 31
1	Bad Debt Expense	$    3,580		4030-450
1	Allowance for Doubtful Accounts		$    3,580
2	Interest Receivable	$        534		8900*8%*9/12
2	Interest Revenue		$        534
3	Insurance Expense	$    2,600		3900/6*4
3	Prepaid Insurance		$    2,600
4	Depreciation Expense	$    3,460		(136500-32700)/30
4	Accumulated Depreciation - Building		$    3,460
5	Depreciation Expense	$ 10,152		(61500-5100-5640)/5
5	Accumulated Depreciation - Equipment		$ 10,152
6	Depreciation Expense	$        272		(18600-2280)/5*1/12
6	Accumulated Depreciation - Equipment		$        272
7	Amortization Expense	$    1,000		9000/9
7	Accumulated Amortization		$    1,000
8	Salaries and Wages Expense	$    2,120
8	Salaries and Wages Payable		$    2,120
9	Interest Expense	$    4,820		(35600+12600)*10%
9	Interest Payable		$    4,820
10	Income Tax Expense	$ 12,100
10	Income Tax Payable		$ 12,100

	Unadj Beging		Dec Normal		Unadjusted Dec 31		Adjustments		Adjusted 31st Dec
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$     25,600			$ 21,780	$        3,820				$        3,820
Accounts Receivable	$     36,200		$    5,500		$     41,700				$     41,700
Notes Receivable	$        8,900				$        8,900				$        8,900
Interest Receivable					$              -			$       534	$         -534
Inventory	$     36,030			$    3,450	$     32,580				$     32,580
Prepaid Insurance	$        3,900				$        3,900			$    2,600	$        1,300
Land	$     21,000				$     21,000				$     21,000
Building	$   136,500				$   136,500				$   136,500
Equipment	$     61,500		$ 13,500		$     75,000				$     75,000
Patent	$        9,000				$        9,000			$    1,000	$        8,000
Allowance for Doubtful Accounts		$           450				$           450		$    3,580		$        4,030
Accumulated Depreciation -Building		$     45,500	$    1,900			$     43,600		$    3,460		$     47,060
Accumulated Depreciation -Equipment		$     24,600				$     24,600		$ 10,424		$     35,024
Accounts Payable		$     27,300				$     27,300				$     27,300
Salaries and Wages Payable						$              -		$    2,120		$        2,120
Note Payable		$     12,600				$     12,600				$     12,600
Income Tax Payable						$              -		$ 12,100		$     12,100
Interest Payable						$              -		$    4,820		$        4,820
Notes Payable		$     35,600				$     35,600				$     35,600
Common Stock		$     51,400				$     51,400				$     51,400
Retained Earning		$     17,180				$     17,180				$     17,180
Dividends	$     13,000				$     13,000				$     13,000
Sales Revenue		$   942,000		$    5,500		$   947,500				$   947,500
Interest Revenue					$              -			$      -534	$           534
Gain on Disposal of Plant Assets				$       780	$         -780				$         -780
Bad Debt Expense					$              -		$    3,580		$        3,580
Cost of Goods sold	$   636,500		$    3,450		$   639,950				$   639,950
Depreciation Expense			$       430		$           430		$ 13,884		$     14,314
Income Tax Expense					$              -		$ 12,100		$     12,100
Insurance Expense					$              -		$    2,600		$        2,600
Interest Expense					$              -		$    4,820		$        4,820
Other Operating Expense	$     61,000				$     61,000				$     61,000
Amortization Expense					$              -		$    1,000		$        1,000
Salaries and Wages Expense	$   107,500		$    6,730		$   114,230		$    2,120		$   116,350
Total	$1,156,630	$1,156,630	$ 31,510	$ 31,510	$1,160,230	$1,160,230	$ 40,104	$ 40,104	$1,196,734	$1,196,734