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In: Accounting

The unadjusted trial balance of Marin Inc. at December 31, 2017, is as follows: Debit Credit...

The unadjusted trial balance of Marin Inc. at December 31, 2017, is as follows:

Debit

Credit

Cash

$17,340

Accounts Receivable

106,100

Allowance for Doubtful Accounts

$3,670

Inventory

61,700

Prepaid Insurance

4,599

Bond Investment at Amortized Cost

50,400

Land

28,100

Buildings

152,700

Accumulated Depreciation—Buildings

6,045

Equipment

34,800

Accumulated Depreciation—Equipment

5,800

Goodwill

16,750

Accounts Payable

101,100

Bonds Payable (20-year, 7%)

168,000

Common Shares

120,500

Retained Earnings

61,184

Sales Revenue

190,500

Rent Revenue

11,100

Advertising Expense

23,100

Supplies Expense

10,600

Purchases

97,900

Purchase Discounts

840

Salaries and wages expense

51,800

Interest Expense

12,850

$668,739

$668,739

Additional information:

1.                     Actual advertising costs amounted to $1,540 per month. The company has already paid for advertisements in Montezuma Magazine for the first quarter of 2018.

2.                     The building was purchased and occupied on January 1, 2015, with an estimated useful life of 20 years, and residual value of $31,800. (The company uses straight-line depreciation.)

3.                     Prepaid insurance contains the premium costs of several policies, including Policy A, cost of $2,667, one-year term, taken out on April 1, 2017; and Policy B, cost of $1,932, three-year term, taken out on September 1, 2017.

4.                     A portion of Marin’s building has been converted into a snack bar that has been rented to the Bramble Corp. since July 1, 2016, at a rate of $7,400 per year payable each July 1.

5.                     One of the company’s customers declared bankruptcy on December 30, 2017. It is now certain that the $2,700 the customer owes will never be collected. This fact has not been recorded. In addition, Marin estimates that 3% of the Accounts Receivable balance on December 31, 2017, will become uncollectible.

6.                     An advance of $510 to a salesperson on December 31, 2017, was charged to Salaries and Wages Expense.

7.                     On November 1, 2015, Marin issued 168 $1,000 bonds at par value. Interest is paid semi-annually on April 30 and October 31.

8.                     The equipment was purchased on January 1, 2015, with an estimated useful life of 10 years, and no residual value. (The company uses straight-line depreciation.)

9.                     On August 1, 2017, Marin purchased at par value 42 $1,200, 7% bonds maturing on July 31, 2019. Interest is paid on July 31 and January 31.

10.                   The inventory on hand at December 31, 2017, was $91,100 after a physical inventory count. (Use "Inventory" account for closing out the beginning inventory amount and recording the ending inventory amount.)

(a)

Prepare adjusting and correcting entries for December 31, 2017, using the information given. Record the adjusting entry for inventory using a Cost of Goods Sold account. (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. Round answers to 0 decimal places, e.g. 5,250.)

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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