The charter of the corporation authorized 500,000 shares of $5 par
common stock, and 50,000 shares of $40 par, 3%, preferred stock. As of January
1, 2014, there were 20,000 shares of common stock issued and outstanding and
4,000 shares of preferred stock issued and outstanding.
I am having trouble with the adjusting balance sheet can someone help me?
Adjusting Entries
(1) The employees’ accrued vacation pay at the end of the year was $26,000.
(2) Record depreciation on the equipment purchased on February 1, using the
straight-line method. The equipment has an estimated 9-year useful life and
an estimated residual value of $13,520.
(3) Record insurance expired on the policy purchased January 31.
(4) Record the adjusting entry for the interest accrued and the amortization of the
premium on the bonds payable.
To help you with the adjusting balance sheet, let's go step by step through each of the adjusting entries you mentioned:
(1) Employees' Accrued Vacation Pay:
To record the employees' accrued vacation pay, you need to debit the Vacation Expense account and credit the Vacation Payable account. The amount is $26,000.
(2) Depreciation on Equipment:
To record depreciation on the equipment, you need to calculate the depreciation expense using the straight-line method. The formula for straight-line depreciation is: (Cost - Residual Value) / Useful Life. In this case, the cost is the purchase price of the equipment, and the residual value is given as $13,520. The useful life is 9 years.
Once you calculate the depreciation expense, you need to debit the Depreciation Expense account and credit the Accumulated Depreciation account for the same amount.
(3) Expired Insurance:
To record the insurance expired on the policy purchased January 31, you need to debit the Insurance Expense account and credit the Prepaid Insurance account. The amount recorded will be the portion of the insurance that has expired during the year.
(4) Interest Accrued and Premium Amortization on Bonds Payable:
To record the interest accrued and the amortization of the premium on the bonds payable, you need to calculate the amount based on the interest rate and the outstanding bond balance.
Once you have the amounts, you need to debit the Interest Expense account (for the accrued interest), the Amortization Expense on Premium account (for the premium amortization), and credit the Interest Payable account (for the accrued interest) and the Premium on Bonds Payable account (for the premium amortization).
After you have recorded all these adjusting entries, you can update the balance sheet by adjusting the respective accounts for their current balances, including the adjusting entries you just made.
Remember, it's always good to consult with an accountant or accounting professional to ensure accurate recording and reporting of financial transactions.