Account Title			Debit	Credit
Cash			124,000
Acct Receivable			96,000
Allowance for Doubtful Accts				2,400
Inventory			54,115
Prepaid Rent			24,000
Supplies			6,000
Land			48,000
Bulding			250,000
Equipment			75,000
Accumulated Depreciation; Building				50,000
Accumulated Depreciation; Equipment				21,000
Goodwill			35,500
Patent			15,500
Accounts Payable				132,715
Notes Payable				178,000
Unearned Service Revenue				122,000
Common Stock				96,000
Retained Earnings				126,000
Revenue				689,000
Salary Expense			440,000
Cost of Goods			201,000
Advertising Expenses			15,000
Rent Expense			32,000
Miscellaneous Expense			1,000
TOTALS			1,417,115	1,417,115

A. Supplies on hand at year-end are $1,200.

B. Six months of rent ($24,000) was paid in advanced on September 1st. No rent expense has been recorded since that date.

C. Depreciation expense has not been recorded on the building for 2018. The building has a useful life of 20 years. Bust-a-Move Snowboard uses straight-line depreciation for all asset classifications.

D. Depreciation expense has not been recorded for the equipment for 2018. The equipment has a useful life of 10 years and a salvage value of $5,000. E. Employees work Monday through Friday. The weekly payroll is $7,500 and is paid every Friday. December 31st is a Wednesday.

F. Revenue of $24,000 must be accrued (Note: The earnings process is complete but the amount has not been received from customer.)

G. Smugglers' Notch (a customer) paid $36,000 in advance on September 1, 2018 for services to be provided evenly from October 1, 2018 through March 31, 2019. None of the revenue has yet been recorded.

H. Management has been made aware that $5,000 of the current accounts receivable is deemed uncollectible. Management has asked that this amount be written off immediately.

I. 1,000 snowboard helmets in the amount of $25,000 were ordered on December 15th and were shipped fob shipping point on December 21st. To date the inventory has not been received. The invoice has not yet been received.

J. On December 31st, Management decides to sell one piece of equipment with a historical cost of $15,000, and accumulated depreciation of $3,000. At the end of its useful life this equipment was previously deemed to have no salvage value. Cash proceeds on this sale were $10,000. Transaction has not been recorded.

K. No amortization has been recorded for Bust-A-Move Snowboard's intangible assets. Goodwill was acquired through Bust-A-Move Snowboard's purchase of TJX Shoppe in 2010. The Company has made the election prospectively in the current year to amortize per the PCC guidance. No impairment has been noted.

L. The patent was acquired in 2018 after years of research and development. Legal fees for the patent were $15,500 on January 1, 2018. On that date patent was deemed to have a useful life of 5 years. On December 1, 2018 Bust-a-Move Snowboard, Inc. successfully defended its patent from Burton Snowboards. The costs incurred amounted to $15,000. This transaction has not yet been recorded and has extended the useful life of the patent for 8 years from the date of defense. Any costs incurred were paid in cash.

M. In accordance with Generally Accepted Accounting Principles, Bust-a-Move Snowboard must record their inventory in accordance with the Lower Cost or Market concept. Use the indirect method when recording your proposed entry. Inventory is inclusive of the following:

Inven item	# of Items	Costs	Replace Cost	Selling Price	Cost to Sell	Profit Margin
Bindings	58	52.00	55.00	65.00	5.00	23%
Snowboards	345	131.00	127.50	250.00	15.00	48%
Boots	144	41.00	55.00	55.50	5.00	28%
Helments	1000	25.00	20.00	35.00	2.50	29%

N. No dividends are to be declared for 2018.

O. Management uses the percentage-of-receivables approach for estimating the percent of receivables that will become uncollectible. They have determined that allowance for doubtful accounts should represent 3.5% of the accounts receivable balance, initiating a 1% increase due to the economic circumstances of many of its customers. Adjustment should be made based on the adjusted accounts receivable balance. Note: 2018 Tax rate is 30%.

1. Using the T accounts provided, record the unadjusted beginning balances.

2. Journalize transactions A - O. Example 1: Cash A/R Example 2: Expense Prepaid Rent 3. Post all journal entries to the T accounts. Note you might need to add new ones!

3. Post all journal entries to the T accounts. Note you might need to add new ones!

4. Prepare an adjusted trial balance.

5. Prepare the multiple step Income Statement, Statement of Retained Earnings, and classified Balance Sheet.
6. Prepare and post all closing entries.
7. Prepare a post closing trial balance.

Answer rating: 100% (QA)

Account Title Debit Credit Cash 124000 Acct Receivable 96000 Allowance for Doubtful Accts 2400 Inventory 54115 Prepaid Rent 24000 Supplies 6000 Land 48000 Bulding 250000 Equipment 75000 Accumulated De... View the full answer