On December 1, 2022, you were hired as the assistant accountant for Dan’s Diamonds Ltd., a small company located in Winnipeg Manitoba. The owner of the company, Dan Drew, opened the company one year ago and hired Linda, an in house accountant/manager to look after the bookkeeping and help with the finances. Dan hired you to help Linda because of your training and wanted you to take over the bookkeeping while Linda starts more of the store management for him. It is now December 28 and Dan came to you today at lunch time and told you that Linda is sick and unable to come to work. He needs you to help get the financial records ready to send to the auditor. He gave you the opening trial balance and a list of the transactions for December that related to the sales and operations. He also gave you information for accruals and other items that need to be posted before the books are completed for the year. After finishing your lunch you head back to your office to complete the tasks ahead of you. 

Required: A Record the transactions for the month of December using proper journal entries 

B Using the journal entries, record T accounts for all accounts 

C Record the adjusting entries for the year at December 31 

D Complete the T accounts with the adjusting entries 

E Create the final trial balance 

F Create the balance sheet, income statement, statement of changes in equity, and the cash flow statement using proper form 3 Dan's Diamonds Ltd. 

 Transactions for December

 a) Purchased a new forklift for $12,000 to help carry the diamonds around the warehouse. The company paid $6,000 cash and the balance is due in six months

 b) Sold $40,000 in blue diamonds on account to a major customer with payment expected in 90 days 

c) Dan’s brother Carl bought $500 in shares in the company 

d) Paid $2,300 for repairs to office equipment in cash 

e) Bought $2,000 with cash for supplies to be used next year 

f) Bought $15,000 in new inventory on account 

g) Paid employees at year end with cash totaling $8,900 

h) Received a phone bill for $120 that is payable on January 14 

i) Completed $5,000 of the special design contract that was set up as deferred revenue Other information 

j) The insurance policy was paid in August and expires July 31 2023. Consider if this should be adjusted 

k) The company prepaid its rent at $1,000 a month for a storage facility. The company prepaid 8 months and the expiry is February 28 

l) Tax rate is 20% 

m) Amortization is $3,000 annually on the existing equipment, and the new forklift is estimated at $2,000 per year

Transcribed Image Text:

Dans Diamonds Ltd. Unadjusted trial balance December 1, 20X2 Cash Accounts receivable Inventory Prepaid rent Prepaid insurance Equipment Accumulated amortization Accounts payable Bank loan Unearned revenue Common shares Retained earnings Sales Insurance expense Office supplies Payroll expense Legal expenses Shipping expense Telephone expense Rent expense Depreciation Income tax expense 15,600 36,000 24,000 8,000 10,000 45,000 2,000 9,800 150,000 2,600 5,200 4,800 10,000 323,000 9,000 5,600 25,000 7,400 1,000 35,000 240,000 323,000 Dans Diamonds Ltd. Unadjusted trial balance December 1, 20X2 Cash Accounts receivable Inventory Prepaid rent Prepaid insurance Equipment Accumulated amortization Accounts payable Bank loan Unearned revenue Common shares Retained earnings Sales Insurance expense Office supplies Payroll expense Legal expenses Shipping expense Telephone expense Rent expense Depreciation Income tax expense 15,600 36,000 24,000 8,000 10,000 45,000 2,000 9,800 150,000 2,600 5,200 4,800 10,000 323,000 9,000 5,600 25,000 7,400 1,000 35,000 240,000 323,000

Answer rating: 100% (QA)

A JOURNAL ENTRIES Date Account Debit Credit Dec 1 Equipment 12000 Cash 6000 Accounts Payable 6000 Dec 1 Accounts Receivable 40000 Sales 40000 Dec 1 Cash 500 Common Shares 500 Dec 1 Office Supplies 230... View the full answer