Question

OC Ints 02:48:23 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 $624 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1 b. 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 $310 were still on hand. c. On December 31, 2018, YY's Garage completed repairs on one of Brokeback's trucks at a cost of $810. The amount is not yet d. On December 31, 2018, the company completed a contract for an out-of-state company for $8.000 payable by the customer within 30 days. No cash has been collected and no journal entry has been made for this transaction e. On July 1, 2018, the company purchased a new hauling van. Depreciation for July-December 2018, estimated to total $2,800, has not been recorded As of December 31, the company owes interest of $510 on a bank loan taken out on October 1, 2018. The interest will be paid when the loan is repaid on September 30, 2019. No interest has been recorded yet. 9. Assume the income after the preceding adjustments but before income taxes was $31,000. The company's federal income tax rate is 25%. Compute and record income tax expense. eBook Print references Required:

Answer 1

particulars	amount
Dr insurance Cr prepaid insurance	$26 $26
Dr profit/account Cr supplies	$690 $690
Dr repairs account Cr YY's Garage	$810 $810
Dr account receivable Cr revenue account	$8000 $8000
Dr depreciation Cr Van account	$2800 $2800
Dr interest account Cr interest payables	$510 $510

income before the adjustment

=$31000/25%=124000

income after the adjustment is calculated as follows

income before adjustment = $124000

insurance expense = ($26)

supplies written-off = ($690)

repairs = ($810)

revenue on contact = $8000

depreciation on haul van = ($2800)

interest on bank loan = ($510)

income after the adjustment =$127164

income tax (127164*25%) = $31791