Question

Comprehensive Accounting Cycle Review 9-1 (Part Level Submission) 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) 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.

Answer 1

No.	General journal	debit	credit
1	Equipment (18000+600)	18600
	Cash		18600
2	Depreciation Expense—Equipment	430
	Accumulated Depreciation—Equipment		430
	Cash	3550
	Accumulated Depreciation—Equipment (1900+430)	2330
	Equipment		5100
	Gain on Disposal (3550+2330-5100)		780
3.	Accounts Receivable	5500
	Sales		5500
	Cost of Goods Sold	3450
	Merchandise Inventory		3450
4	Salaries and wages expense	6730
	Cash		6730
5.	Bad Debts Expense	4030
	Allowance for Doubtful Accounts		4030
6.	Interest Receivable ($8900 X 8% X 9/12)	534
	Interest Revenue		534
7.	Insurance Expense (3900/6*4)	2600
	Prepaid Insurance		2600
8.	Depreciation Expense—Building	20760
	Accumulated Depreciation—Building (136500-32700)/5		20760
9.	Depreciation Expense—Equipment	10152
	Accumulated Depreciation—Equipment		10152
	[($61500 – $5,100 – $5,640) ÷ 5]
10.	Depreciation Expense—Equipment	2176
	Accumulated Depreciation—Equipment		2176
	[($18600 – $2280) ÷ 5] X 8/12
11.	Amortization Expense—Patents (9000/9)	1000
	Patent		1000
12.	Salaries Expense	2120
	Salaries Payable		2120
13.	Interest Expense	4820
	Interest Payable		4820
	($12600 + $35,600) X 10%
14.	Income tax Expense	12100
	Income tax Payable		12100