The Goody Shop Ltd. s unadjusted trial balance accounts and amounts (prior to recording any adjusting...

   

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The Goody Shop Ltd. s unadjusted trial balance accounts and amounts (prior to recording any adjusting journal entries) appears as follows, in alphabetical order, on December 31, 2020, the end of its fiscal year: Accounts payable Accounts receivable Accumulated depreciation - Building Administrative expenses Allowance for doubtful accounts Ask Accountant Building Cash Common shares Cost of goods sold (COGS) Dividend income Dividends Equipment Freight out Freight payable Goodwill GST payable Insurance expense Interest expense Interest income Inventory Investment in Bonds - TGS Ltd Investment in RNG Ltd. Land Note payable Property tax expense Rent expense Retained earnings Salaries and benefits Sales Sales discounts Telephone expense Unearned revenue Utilities expense Total Dr $130,000 $96,000 $280,000 $58,000 $550,000 $1,500 $75,000 $11,000 $65,000 $700 $900 $29,000 $10,445 $21,000 $80,000 $5,500 $6,000 $100,000 $19,000 $2,500 $4,000 $1,545,545 Cr $26,000 $10,400 $1,200 $350,000 $20,000 $200 $9,500 $5,000 $500 $20,000 $153,745 $940,000 $9,000 $1,545,545 2.8 Question 1, continued Additional notes: 1. The Land and Building was purchased January 1, 2019. The building had been estimated to have a useful life of 25 years and a residual value of $20,000. The company uses straight-line depreciation for the Building. 2. At January 1, 2020 there were 100,000 common shares outstanding with a total value of $20,000. During the year cash dividends of $1,500 were paid. The Equipment was purchased on April 1, 2020 and is estimated to have a useful life of six years and a residual value of $5,000. The company uses double diminishing balance depreciation method for the Equipment. 3. 4. 5. Ignore any income tax expense. 6. Please round all final amounts to a whole number. 7. Please add additional accounts as necessary. Required (parts a, b, c & d): a) Prepare any adjusting journal entries required from the items noted above and below to finalize the trial balance for The Goody Shop Ltd. s for the December 31, 2020 year end. If there is no entry required state no entry and if there is an entry required show any calculations and the journal entry. If you need additional space please use a separate piece of paper noting the transaction number. The following transactions occurred during the year: 1. On June 30th, 2020 the company sold its land and building. The proceeds on the sale was $398,000 cash. The bookkeeper didn t know how to record this, so he recorded it as Debit Cash $398,000, Credit Ask Accountant $398,000. Scanned with CamScanner Cash $398,000, Credit Ask Accountant $398,000. Scanned with CamScanner Question 1, continued 2. On May 31, 2020 the company purchased a new piece of land and building in exchange for a $425,000, 20 year, 5% bank loan. The loan calls for annual payments of $21,250 plus interest. The fair market value (FMV), as assessed by a property inspector, was $500,000 in total with $350,000 assigned to the land and $150,000 assigned to the building. The building is estimated to have a useful life of 30 years and a residual value of $25,000. The company uses straight-line depreciation for the Building. The bookkeeper didn t record anything for this transaction as the first bank loan payment plus interest isn t due until May 31, 2021. 3. On August 1, 2020 the company reacquired and retired 40,000 common shares for $1.20 per share. The bookkeeper didn t know how to record this, so he recorded it as Debit Ask Accountant $48,000, Credit Cash $48,000. Scanned with CamScanner Question 1. continued 4. On November 1, 2020 e company declared a 5% stock dividend to common shareholders. The stock s market price was $1.40. November 15th was the date of record and November 30 was the date of payment. On November 15th the stock s market price was $1.45 and on November 30th the stock s market price was $1.55. The bookkeeper didn t record anything for this transaction. 5. On December 1, 2020 the company purchased a truck on account from Bob s Auto and Insurance Co. Eight Corporation estimated the truck to have a useful life of 10 years and no residual value and plans to use the double diminishing balance depreciation method. The cost of the truck (a total of $71,880) included $65,000 for the truck, $2,000 to have the company logo painted on the truck, $100 for the annual license plate sticker, $500 for a delivery fee (as they needed the truck delivered to their Fort McMurray location). $900 for the insurance for the first six (6) months of operation and GST of $3,380. Note: all these amounts are to be paid to the same company (Bob s Auto & Insurance Co.). The terms for payment are net 40. The truck was delivered on December 1st and was immediately put to use. The bookkeeper didn t record any journal entries for this transaction as it won t be paid until January 9th, 2021. Scanned with CamScanner Question 1, continued 6. The Goody Shop uses a perpetual inventory system. A physical inventory count determined that inventory on December 31, 2020 was $26,000. Question 1, continued 6. The Goody Shop uses a perpetual inventory system. A physical inventory count determined that inventory on December 31, 2020 was $26,000. 7. The company reviewed the inventory for obsolesce and determined that the LCNRV of inventory was $24,000 on December 31, 2020. 8. It was determined that a customer owing $4,000 has gone bankrupt and will not be paying their outstanding accounts receivable balance. 9. After noting # 8, the credit manager reviewed the outstanding accounts receivable at December 31, 2020 and estimated that $12,000 of its year end accounts receivable balance. would become uncollectible. 10. The company last paid its full-time salaried employees on Friday, December 18th and the next payroll will be paid on January 1, 2021. Employees eam $4,000 a week for a five- day (Monday to Friday) work week. Employees will have worked for nine (9) days before the year end that they have not been paid by year end. Scanned with CamScanner Question 1. continued 11. The note payable is due to be paid in full on January 1, 2022. It has an interest rate of 9%. Interest is paid in cash semi-annually (January 1 and July 1). The interest was last paid on July 1, 2020. 12. The Investment in RNG Ltd. is a held for trading investment (FVTPL) that had a fair value of $20,300 at December 31, 2020. 13. The Investment in Bonds - TGS Ltd. is a $10,000 bond, paying annual interest of 5% that is due December 31, 2025 and is accounted for using the amortized cost method. The I was purchased when the interest rates Interest was ast received on December 31, 2020. 14. The goodwill arose from the purchase of a company a number of years ago. The goodwill was tested for impairment at December 31, 2020 and it was determined it was valued at $79,000. The Goody Shop Ltd. s unadjusted trial balance accounts and amounts (prior to recording any adjusting journal entries) appears as follows, in alphabetical order, on December 31, 2020, the end of its fiscal year: Accounts payable Accounts receivable Accumulated depreciation - Building Administrative expenses Allowance for doubtful accounts Ask Accountant Building Cash Common shares Cost of goods sold (COGS) Dividend income Dividends Equipment Freight out Freight payable Goodwill GST payable Insurance expense Interest expense Interest income Inventory Investment in Bonds - TGS Ltd Investment in RNG Ltd. Land Note payable Property tax expense Rent expense Retained earnings Salaries and benefits Sales Sales discounts Telephone expense Unearned revenue Utilities expense Total Dr $130,000 $96,000 $280,000 $58,000 $550,000 $1,500 $75,000 $11,000 $65,000 $700 $900 $29,000 $10,445 $21,000 $80,000 $5,500 $6,000 $100,000 $19,000 $2,500 $4,000 $1,545,545 Cr $26,000 $10,400 $1,200 $350,000 $20,000 $200 $9,500 $5,000 $500 $20,000 $153,745 $940,000 $9,000 $1,545,545 2.8 Question 1, continued Additional notes: 1. The Land and Building was purchased January 1, 2019. The building had been estimated to have a useful life of 25 years and a residual value of $20,000. The company uses straight-line depreciation for the Building. 2. At January 1, 2020 there were 100,000 common shares outstanding with a total value of $20,000. During the year cash dividends of $1,500 were paid. The Equipment was purchased on April 1, 2020 and is estimated to have a useful life of six years and a residual value of $5,000. The company uses double diminishing balance depreciation method for the Equipment. 3. 4. 5. Ignore any income tax expense. 6. Please round all final amounts to a whole number. 7. Please add additional accounts as necessary. Required (parts a, b, c & d): a) Prepare any adjusting journal entries required from the items noted above and below to finalize the trial balance for The Goody Shop Ltd. s for the December 31, 2020 year end. If there is no entry required state no entry and if there is an entry required show any calculations and the journal entry. If you need additional space please use a separate piece of paper noting the transaction number. The following transactions occurred during the year: 1. On June 30th, 2020 the company sold its land and building. The proceeds on the sale was $398,000 cash. The bookkeeper didn t know how to record this, so he recorded it as Debit Cash $398,000, Credit Ask Accountant $398,000. Scanned with CamScanner Cash $398,000, Credit Ask Accountant $398,000. Scanned with CamScanner Question 1, continued 2. On May 31, 2020 the company purchased a new piece of land and building in exchange for a $425,000, 20 year, 5% bank loan. The loan calls for annual payments of $21,250 plus interest. The fair market value (FMV), as assessed by a property inspector, was $500,000 in total with $350,000 assigned to the land and $150,000 assigned to the building. The building is estimated to have a useful life of 30 years and a residual value of $25,000. The company uses straight-line depreciation for the Building. The bookkeeper didn t record anything for this transaction as the first bank loan payment plus interest isn t due until May 31, 2021. 3. On August 1, 2020 the company reacquired and retired 40,000 common shares for $1.20 per share. The bookkeeper didn t know how to record this, so he recorded it as Debit Ask Accountant $48,000, Credit Cash $48,000. Scanned with CamScanner Question 1. continued 4. On November 1, 2020 e company declared a 5% stock dividend to common shareholders. The stock s market price was $1.40. November 15th was the date of record and November 30 was the date of payment. On November 15th the stock s market price was $1.45 and on November 30th the stock s market price was $1.55. The bookkeeper didn t record anything for this transaction. 5. On December 1, 2020 the company purchased a truck on account from Bob s Auto and Insurance Co. Eight Corporation estimated the truck to have a useful life of 10 years and no residual value and plans to use the double diminishing balance depreciation method. The cost of the truck (a total of $71,880) included $65,000 for the truck, $2,000 to have the company logo painted on the truck, $100 for the annual license plate sticker, $500 for a delivery fee (as they needed the truck delivered to their Fort McMurray location). $900 for the insurance for the first six (6) months of operation and GST of $3,380. Note: all these amounts are to be paid to the same company (Bob s Auto & Insurance Co.). The terms for payment are net 40. The truck was delivered on December 1st and was immediately put to use. The bookkeeper didn t record any journal entries for this transaction as it won t be paid until January 9th, 2021. Scanned with CamScanner Question 1, continued 6. The Goody Shop uses a perpetual inventory system. A physical inventory count determined that inventory on December 31, 2020 was $26,000. Question 1, continued 6. The Goody Shop uses a perpetual inventory system. A physical inventory count determined that inventory on December 31, 2020 was $26,000. 7. The company reviewed the inventory for obsolesce and determined that the LCNRV of inventory was $24,000 on December 31, 2020. 8. It was determined that a customer owing $4,000 has gone bankrupt and will not be paying their outstanding accounts receivable balance. 9. After noting # 8, the credit manager reviewed the outstanding accounts receivable at December 31, 2020 and estimated that $12,000 of its year end accounts receivable balance. would become uncollectible. 10. The company last paid its full-time salaried employees on Friday, December 18th and the next payroll will be paid on January 1, 2021. Employees eam $4,000 a week for a five- day (Monday to Friday) work week. Employees will have worked for nine (9) days before the year end that they have not been paid by year end. Scanned with CamScanner Question 1. continued 11. The note payable is due to be paid in full on January 1, 2022. It has an interest rate of 9%. Interest is paid in cash semi-annually (January 1 and July 1). The interest was last paid on July 1, 2020. 12. The Investment in RNG Ltd. is a held for trading investment (FVTPL) that had a fair value of $20,300 at December 31, 2020. 13. The Investment in Bonds - TGS Ltd. is a $10,000 bond, paying annual interest of 5% that is due December 31, 2025 and is accounted for using the amortized cost method. The I was purchased when the interest rates Interest was ast received on December 31, 2020. 14. The goodwill arose from the purchase of a company a number of years ago. The goodwill was tested for impairment at December 31, 2020 and it was determined it was valued at $79,000.