Sample Question: Complex Category

Pool Corporation is the world's largest wholesale distributor of swimming pool supplies and equipment $\backslash$& services.

It sells these products to swimming pool repair and service businesses like Penny's Pool Service $\backslash$& Supply Inc., swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family$-$owned businesses like Penny's. Its trial balance for the last year ended December $31,2019$ is presented below:

The following transactions occurred during the financial year $2020$:

a$.$ A retail pool customer pays his outstanding balance of $$10,200$ to Pool Corporation.

b$.$ Supplies purchased in Cash amounting $$450.$

c$.$ Pool Corporation purchases Product Inventory in Cash amounting to $$3,400.$

d$.$ Paid wages in cash amounting to $$7,800.$

e$.$ Pool Corporation purchased equipment worth $$5,000$ and paid immediately.

f$.$ Pool Corporation paid $$2,400$ cash for the premium on a $12$th month insurance policy beginning from December $2020.$

g$.$ Pool Corporation paid $$200$ towards general repairs in cash.

h$.$ Pool Corporation paid $$3,200$ cash towards Utilities.

i$.$ Pool Corporation paid $$180$ towards transportation for one of the equipment as per the sale agreement.

j$.$ Pool Corporation purchased Product Inventory for $$28,000$ Cash.

k$.$ Pool Corporation owed $$1,000$ wages to the office receptionist and three assistants for working the last two days in December

The employees will be paid in January $2021.$

I. On October $1,2020,$ Pool Corporation received $$24,000$ from customers who prepaid pool cleaning service for one year beginning

on November $1,2020.$

m$.$ Pool Corporation received a $$680$ utility bill for December utility usage. It will be paid in January $2021.$

n$.$ Pool Corporation borrowed $$30,000$ from a local bank on May $1,2020,$ signing a note with a $6$ percent interest rate. The note and

interest are due on May $1,2021.$

o$.$ On December $31,2020,$ Pool Corporation cleaned and winterized a customer's pool for $$12,700,$ but the service was not yet

recorded on December $31.$

p$.$ On August $1,2020,$ Pool Corporation purchased a two$-$year insurance policy for $$3,000,$ with coverage beginning on that date.

q$.$ During $2020,$ Pool Corporation purchased supplies costing $$25,000$ from various suppliers for cash.

r$.$ Pool Corporation estimated that depreciation on its buildings and equipment was $$8,300$ for the year.

s$.$ At December $31,2020,$ $$1,400$ of interest on investments was earned that will be received in $2021.$

t$.$ Rent for December due to be paid in January $2020$ of $$1,900.$

u$.$ Sold $$43,000$ of goods and received the amount on the same day.

v$.$ Record the expired insurance purchased $($trans$.$ f$)$ for the month of December.

w$.$ Sales worth $$17,000$ made to Penny's Pool Service & Supply Inc. on Credit.

x$.$ Pool Corporation received utilities bill for $$520$ for December. Paid in cash when received.

y$.$ Property tax paid $$9,900$ during the year.

z$.$ Received partial payment from Penny's Pool Service & Supply Inc amounting to $$8,000$ for the purchase made this year. $($tras$."$w$")$

a$1.$ Pool Corporation purchased equipment worth $$5,000$ on credit basis.

b$2.$ Pool Corporation received the remaining balance amount due towards the recent sale made to Penny's Pool Service & Supply Inc.

$($trans $"$w$")$

c$3.$ Paid for the equipment purchased. $($tran$.$ A$1)$

d$4.$ On December $31,2020,$ Pool Corporation had $$22,000$ of pool cleaning supplies on hand. Record the necessary adjusting entry.

e$5.$ Property tax due and payable worth $$13,000.$

e$6.$ Recognize revenue earned $($transaction L$)$

e$7.$ Record interest accrued on bank loan $($Transaction N$).$

e$8.$ Record the adjusting entry to record expired insurance $($Transaction P$).2.$ Post the entries and their balances to their respective T$-$accounts. $3.$ Prepare Adjusted Trial Balance. $4.$ Prepare Income Statement. $5.$ Prepare Statement of Owner's Equity. $6.$ Prepare Balance Sheet. $($Input all amounts as positive values.$)7.$ Post the closing entries. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $0$ & $10$ & j & Product inventory & $28,000$ & $\backslash \backslash$

$\backslash$hline & & & Cash & & $28,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $11$ & k & Wages expense & $1,000$ & $\backslash \backslash$

$\backslash$hline & & & Wages payable & & $1,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $12$ & $1$ & Cash & $24,000$ & $\backslash \backslash$

$\backslash$hline & & & Deferred revenue & & $24,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $13$ & m & Utilities expense & $680$ & $\backslash \backslash$

$\backslash$hline & & & Utilities payable & & $680\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $14$ & n & Cash & $30,000$ & $\backslash \backslash$

$\backslash$hline & & & Short term borrowings & & $30,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $15$ & $0$ & Accounts receivable & $12,700$ & $\backslash \backslash$

$\backslash$hline & & & Sales & & $12,700\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $16$ & p & Prepaid insurance & $3,000$ & $\backslash \backslash$

$\backslash$hline & & & Cash & & $3,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $17$ & q & Supplies & $25,000$ & $\backslash \backslash$

$\backslash$hline & & & Cash & & $25,000\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $18$ & $\backslash ($ r $\backslash )$ & Depreciation expense & $8,300$ & $\backslash \backslash$

$\backslash$hline & & & Accumulated depreciation & & $8,300\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $0$ & $19$ & s & In $\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline o & $20$ & t & Rent expense & $1,900$ & $\backslash \backslash$

$\backslash$hline & & & Rent payable & & $1,900\backslash \backslash$

$\backslash$hline $-$ & $21$ & u & Cash & $43,000$ & $\backslash \backslash$

$\backslash$hline & & & Sales & & $43,000\backslash \backslash$

$\backslash$hline o & $22$ & v & Insurance expense & $200$ & $\backslash \backslash$

$\backslash$hline & & & Prepaid insurance & & $200\backslash \backslash$

$\backslash$hline o & $23$ & w & Accounts receivable & $17,000$ & $\backslash \backslash$

$\backslash$hline & & & Sales & & $17,000\backslash \backslash$

$\backslash$hline o & $24$ & $\backslash ($ x $\backslash )$ & Utilities expense & $520$ & $\backslash \backslash$

$\backslash$hline & & & Cash & & $520\backslash \backslash$

$\backslash$hline & & & & & $\backslash \backslash$

$\backslash$hline $\backslash (>\backslash )$ & $25$ & $\backslash ($ y $\backslash )$ & Property tax expense & $9,900$ & $\backslash \backslash$

$\backslash$hline & $2.$ Post the entries and their balances to their respective T$-$accounts. $3.$ Prepare Adjusted Trial Balance.

Pool Corporation

Adjusted The