Matchett Fabrications Ltd. sells greenhouse kits to retailers and garden centres. The company's post-closing trial balance at December 31, 2017, the end of its fiscal year, is presented below:

Matchett had the following transactions during January 2018:
Jan. 1 The bank loan bears interest at 3% and requires monthly payments on the first day of the month consisting of principal of $20,000 plus interest. The interest for December 2017 was properly accrued at the end of 2017.
8 Received payments of $178,000 from customers in payment of their accounts.
13 Made sales on account totalling $216,000 to garden centres. The greenhouse units sold had cost Matchett $122,000.
15 Purchased additional greenhouse kits from a supplier on account for $75,000.
17 Paid accounts payable that were due to creditors totalling $120,000.
18 Paid salaries of $70,000, which included the accrued salaries owing at the end of 2017 and $36,000 related to salaries earned to date in January.
21 Purchased supplies on account for $1,500.
24 Received a shipment of additional greenhouses from a supplier. The invoice for $98,000 is due in 30 days.
26 Made sales of $126,000, of which $58,000 was on account and the remainder was cash. The cost of the greenhouses sold was $68,000.
31 Delivered a custom greenhouse that a customer had ordered and put a $25,000 deposit down on. The total sales price was $50,000 and the greenhouse had cost Matchett $35,000. The customer paid the outstanding balance in cash.
Matchett reconciles its bank account at the end of every month and makes any necessary journal entries. The following information was gathered from reviewing the company's bank statement for the month of January:
1. There were outstanding cheques of $12,000.
2. The service charges on the account were $38 for the month.
3. A deposit for $25,000 was made using the night deposit slot on January 31. This deposit is not reflected on the company's bank statement for January.
4. A cheque from one of Matchett's customers for $9,800 that had been deposited during the month was returned by the bank due to the customer having insufficient funds in their account.
5. The company's account balance at January 31 was $161,162 according to the bank statement.
Matchett records adjustments monthly on the last day of the month. Adjusting entries were required for the following:
1. Record depreciation on the equipment assuming that Matchett uses the straight-line method to depreciate its equipment and the equipment is expected to have a useful life of six years.
2. Accrue interest for the month on the bank loan.
3. When supplies were counted, it was determined that supplies with a cost of $1,300 were still on hand.
4. Accrued salaries payable are $36,000.
5. The estimated income taxes owing for the month of January was $16,000.
Instructions
(a) Record the January transactions.
(b) Prepare the bank reconciliation at January 31, 2018, including any required journal entries.
(c) Set up T accounts, enter the December 31 opening balances, and post the journal entries prepared in parts (a) and (b).
(d) Prepare the necessary adjusting entries.
(e) Post the adjusting entries to the T accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare the (1) income statement, (2) statement of changes in equity, and (3) statement of financial position.

Transcribed Image Text:

MATCHETT FABRICATIONS LTD Post-Closing Trial Balance December 31, 2017 Debit Credit Cash Accounts receivable Supplies Inventory Equipment Accumulated depreciation-equipment Accounts payable Interest payable Salaries payable Unearned revenue Bank loan payable Common shares Retained earnings $128,000 920,00O 3,000 457,000 2,280,000 $ 380,ooo 410,000 5,000 34,000 120,00O 2,000,000 250,000 589,000 $3,788,000 $3,788,000