The following information applies to the questions displayed

[The following information applies to the questions displayed below Cactus Company\'s annual accounting year ends on June 30 Assume It is June 30, and all of the entries except the following adjusting journal entries have been made: a. The company earned service revenue of $1600 on a special job that wus completed June 29 Collection b. On March 31, Cactus paid a six-month premium for property insurance in the amount of $3120 for will be made during July no entry has been recorded coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. At June 30, weges of s860 were eamed by empioyees but not yet paid. The employees willbte peid on the next payroll date, which is July 15 On June credited Unearned Revenue for $410. One-haif of it has now been earned but not yet recorded. Depreciation of s1.460 must be recognized on a service truck purchased on July 1 of the previous year Cash of $3.960 was collected on May 1 for services to be rendered evenly over the next year beginning n May 1 Unea 1, Cactus collected two months revenue of $410. At that date. Cactus debted Cash and e t med Revenue was credited when the cash was received. Some of it has now been an earned but not yet recorded g. The company owes interest of $560 on a bank loan taken out on February t The interest will be paid when the loan is repald next year on January 31 The income after all aojustments except income taxes was $34000 The company\'s tederal income tax rate is 25%. Compute and record income tax expense

Solution

Accounting equation : Transaction Assets EQUALS Liabilities PLUS Stockholders\' Equity Calculations a AR 1600 EQUALS PLUS Sales 1600 b PI -1560 EQUALS PLUS expe -1560 c EQUALS WP 860 PLUS expn -860 d EQUALS UR - 205 PLUS Sales 205 e Acc Dep -1460 EQUALS PLUS exp- dep -1460 f EQUALS UR -660 PLUS Sales 660 3960*2/12 g EQUALS IP 560 PLUS exp Int -560 h EQUALS ITP 8500 PLUS exp IT - 8500 34000*25%