1.Physical count of inventory on Dec31,2006 indicated that the company had 480000$ of inventory on hand.
2.An aging of accounts receivable indicates that $75,000 is uncollectible
3.The company uses straight-line depriciation.The assets have a ten year life and zero salvage value.
4.The company used a third of the remaining insurance policy during 2006
5.The company pays interest for its bond payable on Dec 31 of every year.The coupon rate and the effective rate are both 10%per year
6.the company's tax rate is 35%.All income tax charges are recorded at the end of the year.
7. $200,000 shares of common stock were outstanding during 2006.
a.Prepare AJE
b.closing entries on Dec31,2006.
c.Income statement including Earnings per share dsclosure
d.statement of Retained Earnings.
e.what are the measures of income included on the statement?
I tried working on this problem . But I am confused whether I am doing the AJE and closing entries right or not.Please help me.
Adjusting Journal Entries:
1.Inventory(Ending) 480000
COGS 737000
Purchases 750000
Inventory(Beginning) 467000
2.Bad Debt Expense 25000
Allowance for Doubtful A/c 25000
(75000-50000)
3.Depreciation Expense 85000
Accumulated Depriciation 85000
(Should I be including Inventory and fixed assets here?)
4.Insurance Expense 20000
Prepaid Insurance 20000
(expense=1/3*60000)
5.Interest Expense 50000
Interest Payable 50000
6.
7.No AJE
8.Income tax liability(35000*.35) 12250
Extra Loss 12250
9.Income tax liability 21000
. Loss of accounting principle 21000
Am I doing it correct?Please advise.