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Adjustment data: 12. 13. 14. Recorded the insurance expired from item 7. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $2,900 salvage value The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) Prepare journal entries for the transactions listed above and adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) and Do not indent manuasted No. Account Titles and Explanation Debit Credit 1. Accounts Payable 2495 Cash 2495 2. 3. (To record sales revenue.) (To record cost of goods sold.) 4. 5. 7. 8 9 10. (To record interest expense.) (To record retirement of bonds.) 12. 13. 14. Prepare an adjusted trial balance at December 31, 2017. FLOUNDER CORP Trial Balance December 31, 2017 Debit Credit Prepare an adjusted trial balance at December 31, 2017. FLOUNDER CORP Trial Balance December 31, 2017 Debit Credit Totals Prepare an income statement for the year ending December 31, 2017 FLOUNDER CUKP Income Statement For the Year Ending December 31, 2017 4 Prepare a retained earnings statement for the year ending December 31, 2017. FLOUNDER CORP Retained Earnings Statement For the Year Ending December 31, 2017 4 Prepare a classified balance sheet as of December 31, 2017. (List current assets in order of liquidity. FLOUNDER CORP. Balance Sheet December 31, 2017 Assets Current Assets Total Current Assets Long-term Investments Total Long-term Investments Total Assets Liabilities and Stockholders' Equity Current Liabilities Total Liabilities Stockholders' Equity Total Stockholders' Equity Question 5 Flounder Corp.'s balance sheet at December 31, 2016, is presented below FLOUNDER CORP Balance Sheet December 31, 2016 Cash Inventory Prepaid insurance Equipment $30,000 Accounts payable $13,800 2,495 49,900 25,600 Retained earnings $13,705 $105,500 30,200 Interest payable 5,500 Bonds payable 39,800 Common stock $105,500 During 2017, the following transactions occurred. Flounder uses a perpetual inventory system 1. Flounder paid $2,495 interest on the bonds on January 1, 2017. 2. Flounder purchased $244,800 of inventory on account. 3. Flounder sold for $493,000 cash inventory which cost $269,000. Flounder also collected $29,580 sales taxes 4. Flounder paid $220,000 on accounts payable. 5. Flounder paid $2,495 interest on the bonds on July 1, 2017. 6. The prepaid insurance ($5,500) expired on July 31 7. On August 1, Flounder paid $9,960 for insurance coverage from August 1, 2017, through July 31, 2018 8. Flounder paid $15,000 sales taxes to the state 9. Paid other operating expenses, $89,000 10. 11. Redeemed the bonds on December 31, 2017, by paying $48,000 plus $2,495 interest. issued $85,000 of 8% bonds on December 31, 2017, at 103. The bonds pay interest every June 30 and December 31

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