Brayden Towing Company is at the end of its accounting year, December 31, 2011. The following data that must be considered were developed from the company’s records and related documents:
a.
On January 1, 2011, the company purchased a new hauling van at a cash cost of $24,600. Depreciation estimated at $4,000 for the year has not been recorded for 2011.
b.
During 2011, office supplies amounting to $1,000 were purchased for cash and debited in full to Supplies. At the end of 2010, the count of supplies remaining on hand was $400. The inventory of supplies counted on hand at December 31, 2011, was $250.
c.
On December 31, 2011, Lanie’s Garage completed repairs on one of the company’s trucks at a cost of $1,200; the amount is not yet recorded and by agreement will be paid during January 2012.
d.
On December 31, 2011, property taxes on land owned during 2011 were estimated at $1,500. The taxes have not been recorded, and will be paid in 2012 when billed.
e.
On December 31, 2011, the company completed a contract for an out of state company for $6,000 payable by the customer within 30 days. No cash has been collected, and no journal entry has been made for this transaction.
f.
On July 1, 2011, a three year insurance premium on equipment in the amount of $1,200 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1.
g.
On October 1, 2011, the company borrowed $11,000 from the local bank on a one year, 14 percent note payable. The principal plus interest is payable at the end of 12 months.
h.
The income before any of the adjustments or income taxes was $30,000. The company’s federal income tax rate is 30 percent. (Hint: Compute adjusted income based on (a) through (g) to determine income tax expense.)