Lloyd Christmas, Ltd.’s accounting records reflect the following account balances at January 1, 2019 (beginning of the year):

Account	Debit	Credit
Equipment	$160,000
Inventory	$ 95,000
Accounts Receivable	$ 20,000
Building	$120,000
Cash	$ 150,000
Supplies	$ 12,000
Prepaid Rent	$ 15,000
Land	$100,000
Unearned Revenues		$50,000
Accounts Payable		$60,000
Accumulated Depreciation - Equipment		$30,000
Accumulated Depreciation - Bldg		$50,000
Note Payable		$140,000
Owners’ Capital		$342,000

This company uses the perpetual inventory system (therefore, the company records a decrease to inventory and COGS expense for every sale). There were no owner investments or owner withdrawals for the year. Make the following adjustments for the year ended December 31, 2005:

Example: The company made a sale of services on credit. (see table below for entry)

1) The Prepaid Rent for Lloyd Christmas Ltd. was paid on December 31, 2018 (the journal entry for the initial prepayment has already been made). The lease was for two years. Make the adjustment for the expired rent at December 31, 2019 (for the whole year).

2) The note payable was taken out last year. The note carries an annual interest rate of 6%. Interest needs to be accrued for the entire year. The interest will be paid February 8^th, 2020 (next year). Record the adjustment necessary at December 31, 2019.

3) Employee salaries in the amount of $52,500 were incurred for the year. Of that amount, $48,500 had been paid in cash, the remainder was still owed to employees at the end of the year. Record the journal entry necessary at December 31, 2019 to account for both the paid and unpaid portion of salaries (hint: you should use 3 accounts).

4) At the end of the year, $4,750 of the supplies remained on hand. Record the adjustment necessary at December 31, 2019.

5) The company paid $18,000 on their accounts payable during the year. Record the entry.

6) The company made sales of merchandise (inventory) to customers for a total $240,000. The sales were made half on credit, and half in cash. The inventory sold had originally cost the company $90,000 (hint #1: this is your cost of goods sold expense). (hint #2: you should use 5 accounts to record entry).

7) The company provided the services associated with the Unearned Revenues balance at the beginning of the year. Record the adjustment necessary for the year 2019.

8) At December 31, the company had earned $35,000 in tax consulting revenue, but had not yet received payment from their customer. Record the adjustment necessary at December 31, 2019. (use service revenue)

9) On December 31, received $15,000 in cash representing advance payment for services to be provided in February of 2020. Record the journal entry necessary on December 31, 2019.

10) The building has a useful life of 30 years and no salvage value. The equipment has a useful of 10 years and has a $30,000 salvage value. Record the adjustments necessary at December 31, 2019 (record the entire year’s depreciation for both the building and equipment).

11) Taxes for the year totaled $28,000. The taxes will be paid next year. Record the adjustment necessary at December 31, 2019.

12) The owners withdrew $2,000 for personal use on December 31, 2019. Record the owners’ withdrawal.

Required:

A. Record the preceding transactions in the journal below. Make sure to indicate each account affected by the transactions.

B. Record the transactions from step A. in the ledger (use the T accounts provided below.)

C. Prepare an ending trial balance at December 31, 2019.

D. Prepare an income statement for Lloyd Christmas for 2019.

E. Prepare a statement of owners’ equity for the year ended December 31, 2019.

6. Prepare a CLASSIFIED balance sheet for Lloyd Christmas at December 31, 2019.
7. Prepare the closing entries.
8. Prepare a post-closing trial balance at December 31, 2019.

	Accounts	Debit	Credit
	Example: A/R Service Rev.	XXX	XXX
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Answer rating: 100% (QA)

A Accounts Debit Credit 1 Rent expense 150002 7500 Prepaid rent 7500 Rent expired for 1 year 2 Inter... View the full answer