Solved: The following unadjusted trial balance is available

for Tenfour Trucking

The following unadjusted trial balance is available for Tenfour Trucking

The following unadjusted trial balance is available for Tenfour Trucking Company on January
31, 2016:

Required

1. Enter the unadjusted trial balance in the first two columns of a ten column work sheet.

2. Enter the necessary adjustments in the appropriate columns of the work sheet for each of the
following:

a. Prepaid insurance represents the cost of a 24-month policy purchased on January 1, 2016

b. The warehouse has an estimated useful life of 20 years and an estimated salvage value of
$4,000.

c. The truck fleet has an estimated useful life of six years and an estimated salvage value of
$15,000.

d. The promissory note was signed on January 1, 2015. Interest at an annual rate of 9% and the
principal of $50,000 are due on December 31, 2016.

e. The customer deposits represent amounts paid in advance by new customers. A total of
$4,500 of the balance in Customer Deposits was recognized during January 2016.

f. Wages and salaries earned by employees at the end of January but not yet paid amount to
$8,200.

g. Income taxes are accrued at a rate of 30% at the end of each month.

3. Complete the remaining columns of the work sheet.

4. Prepare in good form the following financial statements:

a. Income statement for the month ended January 31, 2016

b. Statement of retained earnings for the month ended January 31, 2016

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 c. Balance sheet at January 31, 2016

5. Compute Tenfour's current ratio. What does this ratio tell you about the company's liquidity?

6. Compute Tenfour's profit margin. What does this ratio tell you about the company's
profitability?

The following unadjusted trial balance is available for Tenfour Trucking

ANSWER
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