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Brokeback Towing Company is at the end of its accounting year, December 31, 2015. The following data that must be considered were developed from the company’s records and related documents: a. On July 1, 2015, a two-year insurance premium on equipment in the amount of $432 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1. b. At the end of 2015, the unadjusted balance in the Supplies account was $1,000. A physical count of supplies on December 31, 2015, indicated supplies costing $230 were still on hand. c. On December 31, 2015, YY’s Garage completed repairs on one of Brokeback’s trucks at a cost of $730. The amount is not yet recorded. It will be paid during January 2016. d. On December 31, 2015, the company completed a contract for an out-of-state company for $7,600 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, 2015, the company purchased a new hauling van. Depreciation for July–December 2015, estimated to total $2,400, has not been recorded. f. As of December 31, the company owes interest of $430 on a bank loan taken out on October 1, 2015. The interest will be paid when the loan is repaid on September 30, 2016. No interest has been recorded yet. g. Assume the income after the preceding adjustments but before income taxes was $23,000. The company’s federal income tax rate is 25%. Compute and record income tax expense.

Give the adjusting journal entry required for each item at December 31, 2015. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1.Record the entry for insurance expense if, on July 1, 2015, a two-year insurance premium on equipment in the amount of $432 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1.
2.Record the entry for supplies expense if, at the end of 2015, the unadjusted balance in the Supplies account was $1,000. A physical count of supplies on December 31, 2015, indicated supplies costing $230 were still on hand.
3.Record the entry for repairs if, on December 31, 2015, YY’s Garage completed repairs on one of Brokeback’s trucks at a cost of $730. The amount is not yet recorded. It will be paid during January 2016.
4.Record the entry for the contract completed by the company on December 31 for an out-of-state company for $7,600 payable by the customer within 30 days. No cash has been collected and no journal entry has been made for this transaction.
5.Record the entry for depreciation for a hauling van purchased by the company on July 2015. Depreciation for July-December 2015, estimated to total $2,400, has not been recorded.
6.Record the entry for $430 interest owed by the company as of December 31, on a bank loan taken out on October 1, 2015. The interest will be paid when the loan is repaid on September 30, 2016. No interest has been recorded yet.
7.Record the entry for income tax expense if, the income after the preceding adjustments but before income taxes was $23,000. The company’s federal income tax rate is 25%. Compute and record income tax expense.

Respuesta :

Answer:

All journal entries with a  December 31, 2015 date

a. and 1)

Insurance expense                                            Debit         $ 108

Prepaid insurance                                              Credit                       $ 108

To record insurance expense relating to expired portion.

b and 2)

Supplies Expense                                               Debit         $ 770

Supplies                                                               Credit                        $ 770

Recording of consumption of supplies

c and 3)

Repairs expense                                                  Debit        $ 730

Accounts payable                                                 Credit                      $ 730

Recording of unpaid truck repair expenses

d and 4)

Accounts Receivable                                           Debit      $ 7,600

Service Revenue                                                  Credit                      $ 7,600

Service revenue uncollected at year end recorded

e and 5)

Depreciation expense                                         Debit     $ 2,400

Allowance for depreciation                                 Credit                      $ 2,400

Depreciation on hauling van recorded

f and 6)

Interest Expenses                                                Debit    $ 430

Interest Payable                                                   Credit                      $ 430

Recording of interest on loan due

g and 7)

Income Tax Expense                                            Debit   $ 5,750

Income tax Payable                                              Credit                   $ 5.750

Income tax expense # 25 % recorded

Explanation:

Insurance

Insurance amount paid and debited to prepaid expenses                 $ 432

Expired portion  of insurance 432/24* 6                                               $ 108

Supplies

Unadjusted balance of supplies account                                            $  1,000

Actual supplies in hand                                                                        $    230

Supplies consumed                                                                                $   770      

Income Tax Expense

Income per data in the question                                                          $ 23,000

Federal tax Rate                                                                                          25 %

Income tax Expense = $ 23,000 * 25 %                                               $ 5,750