Voltaire Corporation’s Balance Sheet at December 31, 2013 is presented below:
December 31, 2013
Accounts Receivable 45,500
Allowance for Doubtful
Accounts Payable $25,600
Common Stock($1 par) 50,000
Retained Earnings 147,400
During 2014, the following transactions occurred:
1.On January 1, 2014, Voltaire issued 1,500 shares of $20 par, 6% preferred stock for $33,000.
2.On January 1,2014, Voltaire also issued 900 shares of the $1 par value common stock for $6,300.
3.Voltaire performed services for $276,000 on account.
4.On April 1,2014, Voltaire collected fees of $36,000 in advance for services to be performed from April 1, 2014 to March 31, 2015.
5.Voltaire collected $267,000 from customers on account
6. Voltaire brought $26,100 of supplies on account.
7.Voltaire paid $32,200 on accounts payable.
8.Voltaire reacquired 400 shares of its common stock on June 1,2014, for $8 per share.
9.Paid other operating expenses of $188,200
10. On December 31, 2014, Voltaire declared the annual preferred stock dividend and a $.50 per share dividend on the outstanding common stock, all payable on January 15, 2015.
11.An account receivable of $1,300 which originated in 2013 is written off as uncollectible.
1.A count of supplies indicates that $5,900 of supplies remain unused at year end.
2.Recorded revenue recognized from item 4 above.
3.The allowance for doubtful accounts should have a balance of $3,500 at year end.
4.Depreciation is recorded on the building on a straight line basis based on a 30 year life and a salvage value of $10,000.
5.The income tax rate is 30% (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)
a) Set up T- accounts to determine ending balances.
b) Prepare journal entries for the transactions listed above and adjusting entries.
c) Prepare an adjusted trial balance at December 31, 2014 (Hint: Totals are $647,620)