Question

journal entries financial accounting

Check my work Brokeback Towing Company is at the end of its accounting year, December 31, 2018. The following data that must be considered were developed from the company's records and related documents: a On July 1, 2018, a two-year insurance premium on equipment in the amount of $480 was paid and debted in to Prepaid Insurance on that date Coverage began on July 1 At the end of 2018. the unadjusted balance in the Supplies account was $1,000. A physical count of supplies on December 31, 2018 indicated supplies costing 5250 were still on hand c On December 31, 2018, YY'Garage completed repairs on one of Brokeback's trucks at a cost of $750. The amount is not yet recorded. It will be paid during January 2019 On December 31, 2018, the company completed a contract for an oo of state company for $7.700 payable by the customer within 30 days. No cash has been collected and no jornal entry has been made for the transaction e On July 1, 2018, the company purchased a new hauling van. Depreciation for july-December 2018, estimated to total $2.500, has not been recorded As of December 31, the company owsinterest of $450 on a bank loan taken out on October 2018. The interest will be paid when the loans paid on September 30, 2019. No interest has been recorded yet. Assume the income after the preceding adjustments but before income taxes was $25,000. The company's federal income tax rate 30% Compute and record income tax expense

Answer 1

Adjusting entry

No	Account and explanation	Debit	Credit
Dec 31	Insurance expense (480/24*6)	120
	Prepaid insurance		120
Dec 31	Supplies expense (1000-250)	750
	Supplies		750
Dec 31	Repairs expense	750
	Account payable		750
Dec 31	Account receivable	7700
	Service revenue		7700
Dec 31	Depreciation expense	2500
	Accumulated depreciation		2500
Dec 31	Interest expense	450
	Interest payable		450
Dec 31	Income tax expense (25000*30%)	7500
	Income tax payable		7500

Net income understated by $4370