Question

Culver Corporation’s unadjusted trial balance at December 1, 2017, is presented below. Debit Credit Cash $25,800 Accounts Receivable 36,300 Notes Receivable 9,600 Interest Receivable 0 Inventory 36,390 Prepaid Insurance 3,300 Land 20,200 Buildings 160,800 Equipment 61,000 Patent 9,900 Allowance for Doubtful Accounts $550 Accumulated Depreciation—Buildings 53,600 Accumulated Depreciation—Equipment 24,400 Accounts Payable 27,700 Salaries and Wages Payable 0 Notes Payable (due April 30, 2018) 11,500 Income Taxes Payable 0 Interest Payable 0 Notes Payable (due in 2023) 35,400 Common Stock 55,000 Retained Earnings 19,440 Dividends 13,000 Sales Revenue 949,500 Interest Revenue 0 Gain on Disposal of Plant Assets 0 Bad Debt Expense 0 Cost of Goods Sold 637,000 Depreciation Expense 0 Income Tax Expense 0 Insurance Expense 0 Interest Expense 0 Other Operating Expenses 61,800 Amortization Expense 0 Salaries and Wages Expense 102,000 Total $1,177,090 $1,177,090 The following transactions occurred during December. Dec. 2 Purchased equipment for $16,200, plus sales taxes of $1,200 (paid in cash). 2 Culver sold for $3,550 equipment which originally cost $5,200. Accumulated depreciation on this equipment at January 1, 2017, was $1,850; 2017 depreciation prior to the sale of equipment was $500. 15 Culver sold for $5,300 on account inventory that cost $3,330. 23 Salaries and wages of $6,610 were paid. Adjustment data: 1. Culver estimates that uncollectible accounts receivable at year-end are $3,820. 2. The note receivable is a one-year, 8% note dated April 1, 2017. No interest has been recorded. 3. The balance in prepaid insurance represents payment of a $3,300, 6-month premium on September 1, 2017. 4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $30,600. 5. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost. 6. The equipment purchased on December 2, 2017, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,400. 7. The patent was acquired on January 1, 2017, and has a useful life of 9 years from that date. 8. Unpaid salaries at December 31, 2017, total $2,130. 9. Both the short-term and long-term notes payable are dated January 1, 2017, and carry a 10% interest rate. All interest is payable in the next 12 months. 10 Income tax expense was $12,600. It was unpaid at December 31.

Answer 1