Raymond Company’s trial balance at December 31, 2014, is presented below. All 2014

| March 29, 2017

Question
Raymond Company’s trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described shown below.

Debit

Credit

Cash

$28,000

Accounts receivable

36,000

Notes receivable

10,000

Interest receivable

0

Inventory

36,200

Prepaid insurance

4,400

Land

20,000

Buildings

160,000

Equipment

60,000

Patents

8,000

Allowances for doubtful accounts

300

Accumulated depreciation-Buildings

49,000

Accumulated depreciation-Equipment

24,000

…….and so on……..

1. On May 1, 2014, Raymond purchased equipment for $13,000 plus sales taxes of $780 (all paid in cash).

2. On July 1, 2014, Raymond sold for $3,500 equipment which originally cost $5,000.

Accumulated depreciation on this equipment at January 1, 2014, was $1,800; 2014 depreciation prior to the sale of the equipment was $450.

3. On December 31, 2014, Raymond sold for $9,400 on account inventory that cost $6,600.

4. Raymond estimates that uncollectible accounts receivable at year-end is $4,000.

5. The note receivable is a one-year, 8% note dated April 1, 2014. No interest has been recorded.

6. The balance in prepaid insurance represents payment of a $4,400 6-month premium on October 1, 2014.

7. The building is being depreciated using the straight-line method over 40 years. The salvage value is $20,000.

8. 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.

9. The equipment purchased on May 1, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,000.

10. The patent was acquired on January 1, 2014, and has a useful life of 10 years from that date.

11. Unpaid salaries and wages at December 31, 2014, total $2,200.

12. The unearned rent revenue of $6,000 was received on December 1, 2014, for 4 months rent.

13. Both the short-term and long-term notes payable are dated January 1, 2014, and carry a 9% interest rate. All interest is payable in the next 12 months.

14. Income tax expense was $17,000. It was unpaid at December 31.

Instructions

(a) Prepare journal entries for the transactions listed above.

(b) Prepare an updated December 31, 2014, trial balance.

(c) Prepare a 2014 income statement and a 2014 retained earnings statement.

(d) Prepare a December 31, 2014, classified balancesheet.

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