Question

E4-13 (Algo) Determining Financial Statement Effects of Three Adjusting Entries L04-1, 4-2 Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions: a. During the year, the company purchased office supplies that cost $2,700. At the end of the year, office supplies of $770 remained on hand. b. On January 1 of the current year, the company purchased a special machine for cash at a cost of $25,500. The machine's cost is estimated to depreciate at $2,550 per year. c. On July 1, the company paid cash of $1,080 for a two-year premium on an Insurance policy on the machine; coverage began on July 1 of the current year. Required: Complete the following schedule with the amounts that should be reported for the current year. Amount to be Reported Selected Balance Sheet Accounts at December 31 Assets Equipment Accumulated depreciation Net book value of equipment Office supplies Prepaid insurance Selected Income Statement Accounts for Amount to the Current Year ended December 31be Reported Expenses Depreciation expense Office supplies expense Insurance expense

Answer 1

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Complete the following schedule with the amount that should be reported for the current year: I Amount to I I be reported Selected Balansheed Accounts al December 31 1$25,500 1&2550 Assets Equipment Accumulated Depreciation Net Book value of equipment / $22950 ($25500-$4550) Office Supplies $770 prepaid Insurance 14810 ($1080 x Amount to be Reported $ 2550 Selected Income statement for the Current year ended December 31 Expense Depreciation Expenge office supplies & xpernata al Insurance expense . I ($1080 x 0 ) $1930 1 $270 Test Sonde o with dams canner