Question

Wascana Ltd. is a small wholesaler of restaurant supplies. The company’s post-closing trial balance at December 31, 2017, the end of its fiscal year, is presented below: WASCANA LTD. Post-Closing Trial Balance December 31, 2017 Debit Credit Cash $73,000 Accounts receivable 450,000 Allowance for doubtful accounts 22,500 Inventory 370,000 Equipment 1,800,000 Accumulated depreciation—equipment 480,000 Accounts payable 290,000 Interest payable 5,000 Employee income tax payable 47,000 CPP payable 31,000 EI payable 12,000 Provisions 38,000 Unearned revenue 11,000 Bank loan payable 1,500,000 Common shares 63,000 Retained earnings 193,500 $2,693,000 $2,693,000 The company had the following transactions during January 2018. When recording these transactions, use the item number listed in lieu of the date and also use that same item number if recording a subsequent adjustment pertaining to that item. 1. The bank loan bears interest at 4% and requires monthly payments on the first day of the month consisting of a fixed principal, payment of $10,000, plus interest, which was properly accrued at the end of 2017. A loan payment was made on January 1, 2018. 2. Accrue interest on the bank loan for the month of January 2018. 3. Early in January 2018, the company paid for a one-year insurance policy on equipment for $25,200. 4. Equipment has a useful life of five years and is depreciated on a double-diminishing-balance basis. 5. All of the payroll-related liabilities were paid off in early January 2018. 6a. At the end of January, salaries for that month were paid out. Gross salaries were $260,000 and amounts withheld from the employees’ paycheques included the related employee income tax of $47,000, CPP of $15,500, and EI of $4,888. 6b. In addition to these amounts, the employer was required to contribute $15,500 to CPP and $6,843 to EI. The salaries were paid but no amounts were remitted to the government regarding the salaries for January. 7. Paid a $9,000 income tax instalment. 8. Sales for the month of January were $747,000 and the cost of the inventory sold was $293,000. The company uses a perpetual inventory system. All sales were on credit. 9. Accounts receivable collected during the month were $810,000. 10. A customer owing the company $17,000 went bankrupt during January. 11. Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubtful accounts were $27,000 at month end. 12a. Inventory costing $253,000 was purchased in January on credit. 12b. Administrative expenses of $53,000 were incurred on credit. 13. During the month of January, accounts payable amounting to $327,000 were paid. 14. The provisions at December 31, 2017, consisted of estimated damages from a lawsuit. In January, legal counsel felt that an additional $20,000 of damages had become probable that month. Any expenses relating to these damages are recorded in administrative expenses. 15. Unearned revenue consists of deposits from customers received in advance. No new deposits were received in January, but by the end of the month, management has estimated that unearned revenue at that time should be $8,000. Products sold to these customers that paid deposits cost 25% of the price they were sold at. 16. The company declared and paid out dividends amounting to $5,000 in January. Prepare T accounts and enter the December 31 balances.

Answer 1

Please hit LIKE button if this helped. For any further explanation, pleas Wascana Ltd Dec. 31 #9 #5 Cash 73,000 #1 810,000 #3 $ S $ S S $ $ EI Payable S 12,000 Dec. 31 S #6a S #66 S Bal. S 15,000 25,200 90.000 192,612 9,000 327,000 5,000 12.000 4.888 6.843 11,731 #6a #13 #16 $ Provisions Dec. 31 $ #14 $ Bal. $ Bal. S 219,188 38,000 20,000 58,000 Dec. 31 #8 Bal. $ S $ Accounts Receivable 450,000 9 S 747.000 #10 370,000 810,000 17,000 $ #15 S Unearned Revenue 3,000 Dec. 31 $ Bal. $ 11,000 8.000 Allowance for Doubtful Accounts Dec. 31 S $ 17,000 #11 S Bal. S #10 22,500 21.500 27,000 #1 Bank Loan Payable S 10.000 Dec. 31 $ 1.500.000 Bal. $1,490,000 Common Shares Dec. 31 S 63.000 Dec. 31 #12 Bal. S S $ Inventory 370,000 #8 253,000 #15 329,250 S S 293,000 750 Retained Earnings Dec. 31 $ 193,500 Dec. 31 2.100 S S S Prepaid Insurance $ 25,200 23.100 Dividends Declared $ 5,000 #16 Bal Sales #8 #15 Bal. Equipment 1.800.000 S 747,000 S 3.000 S 750,000 Dec. 31 $

Accumulated Depreciation Equipment Dec. 31 S 480,000 #4 $ 44.000 Bal. S 524.000 Cost of Goods Sold #8 S293,000 #15 $ 750 Bal. $293,750 S S #13 Accounts Payable Dec. 31 327.000 #12 #12S Bal S 290,000 253,000 53,000 269,000 Administrative Expenses #12 S 53,000 #14 $ 20.000 Bal. S 69,000 S Interest Payable 5.000 Dec. 31 Salaries Expense #6a S260,000 S S S S 5,000 4.967 4,967 Bal. Employee Benefits Expense #6b S 22,343 #5 Employee Income Tax Payable $ 47,000 Dec. 31 $ #6 $ Bal. S 47,000 47,000 47,000 #3 S Insurance Expense 2.100 Depreciation Expense S 44,000 #4 #5 S CPP Payable 31,000 Dec. 31 #6a #6b Bal. S S S S 31,000 15,500 15,500 31,000 Bad Debts Expense #11 S 21,500 Interest Expense 4,967 #2 S Income Tax Expense 9,000 In #7 S