Question

1) Prepare Financial Statements for Dec 31, 2018 from transactions listed at bottom of the page, complete with any & all Notes to the Financial Statements. Turn in Journal Entries, Trial Balance, Adjusted Journal Entries, Adjusted Trial Balance, and Post-Closing Trial Balance separately.

Helpful hints-Please double check your work, make sure it balances, make sure accounts are in the correct order

Madoff’s Marijuana Dispensary had the following beginning balances December 1, 2018.

Cash                                                                                         $ 3,000,000

Rent Expense                                                                            22,000

Inventory                                                                                  150,000

Prepaid Rent                                                                             2,000

Equipment                                                                                3,000,000

Accumulated Depreciation                                                        50,000

Accounts Payable                                                                      25,000

Salaries & Wages Payable                                                          10,000

Advertising Expense                                                                  2,500

Notes Payable                                                                           300,000

Supplies                                                                                    500

Retained Earnings                                                                     2,402,500

Preferred Stock, 3% cumulative, $1 par value                             $25,000

Common Stock, $0.01 par value;                                                $100,000

Authorized 32 million shares; Issued 18 million shares

Additional Paid In Capital                                                           500,000

Treasury Stock (8 million shares at cost)                                     40,000

Sales Revenue                                                                           3,000,000

Cost of Goods Sold                                                                    500,000

Loan from Owner                                                                      500,000

Insurance Expense                                                                    11,000

Salaries & Wages Expense                                                         130,000

Utilities Expense                                                                       5,000

Supplies Expense                                                                      3,000

Prepaid Insurance                                                                     13,000

Payroll Tax Expense                                                                   10,000

Repairs & Maintenance Expense                                                3,500

Legal Expense                                                                           15,000

Accounting Expense                                                                  5,000

All Adjustments are made at the end of the year. The following information is relevant:

Truck is expected to last 10 years, and have a residual value of $5,000. Depreciated using the straight-line method.

Owner is to be paid back over 5 years beginning next year.

Had supplies on hand of $200

The following transactions occurred during the month:

Used $1,000 of prepaid insurance for the month of December

Used $2,000 of prepaid rent for the month of December

Dec 2 - Sold $100,000 worth of product for cash (cost us 50,000)

Dec 2- Paid employees all money owed

Dec 31 - Paid employees bonus of $15,000

Owe employees for 3 days of work (Dec 29-31) at $1,000/day

Dec 5 - Fixed windows, cost $5,000. Paid in cash

Dec 31 - Paid Accountant $3,000 for work related to December. Paid in cash.

Dec 1- Bought a new truck for $20,000 paid cash. At the end of the first year the truck had been driven 7,000 miles.

Dec 8 - Sold 1,000 shares of common stock for $10 per share, cash

Dec 10 - Repurchased 3,500 shares of stock at $15 per share

Dec 15 - Reissued 3,000 shares of Treasury stock at $30 per share (bought Dec 10^th)

Jan 2 - Sold $500,000 worth of product (cost us $250,000)

Answer 1

Madoff's Marijuana Dispensary Journal Enteries Date Particulars 1.12.2018 Truck a/c To Cash (Truck purchased) Dr. Debit in $ Credit in $ 20000 20000 2.12.2018 Dr. 100000 Cash a/c To Sales Revenue (Sales in Cash) 100000 50000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 50000 10000 2.12.2018 Salaries & Wages Payable a/c Dr. To Cash (Salary paid) 10000 5000 5.12.2018 Repairs & Maintenance Expense a/c Dr. To Cash (Fixed windows) 5000 8.12.2018 10000 Cash a/c Dr. To Common Stock (Common Stock issued) 1000 x 10 10000 52500 10.12.2018 Treasury Shares a/c Dr. To Cash (Treasury shares purchased)3500 x 15 52500 Dr. 90000 15.12.2018 Cash a/c To Treasury Shares To Additional Paid In Capital - Treasury (Treasury shares reissued) 3000 x 15 = 45000 3000 x 30 = 90000 45000 45000 Dr. 15000 31.12.2018 Salaries & Wages Expense a/c To Cash (Bonus paid) 15000 Dr. 3000 Salaries & Wages Expense a/c To Cash (paid accountant) 3000

Adjusting Enteries Date Particulars 31.12.2018 Supplies Expense a/c To Supplies (Supplies Expensed) Dr. Debit in $ Credit in $ 300 300 Dr. 1000 31.12.2018 Insurance Expense a/c To Prepaid Insurance (Insurance expensed) 1000 Dr. 2000 31.12.2018 Rent Expense a/c To Prepaid Rent (Rent expensed) 2000 125 125 31.12.2018 Depreciation a/c Dr. To Accumulated Depreciation -Truck (To record depreciation) (20000 - 5000)/(10 x12)

Worksheet For the period ending 31.12.2018 Particulars Cash Inventory Prepaid Rent Prepaid Insurance Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 3094500 3094500 100000 100000 2000 2000 13000 1000 12000 500 300 200 3000000 3000000 50000 50000 20000 20000 125 125 25000 25000 Supplies 300000 500000 25000 110000 545000 2402500 300000 500000 25000 110000 545000 2402500 47500 47500 Equipment Accumulated Depreciation - Equip Truck Accumulated Depreciation - Truck Accounts Payable Salaries & Wages Payable Notes Payable Loan from Owner Preferred Stock, 3% cumulative, $1 par value Common Stock, $0.01 par value; Additional Paid In Capital Retained Earnings Treasury Stock (8 million shares at cost) Sales Revenue Cost of Goods Sold Advertising Expense Insurance Expense Salaries & Wages Expense Utilities Expense Supplies Expense Payroll Tax Expense Repairs & Maintenance Expense Legal Expense Accounting Expense Rent Expense Depreciation Totals 3100000 3100000 1000 550000 2500 11000 148000 5000 3000 10000 8500 15000 5000 22000 300 550000 2500 12000 148000 5000 3300 10000 8500 15000 5000 24000 125 7057625 2000 125 3425 7057500 7057500 3425 7057625

3100000 -550000 2550000 Statement of Income For the period ending 31.12.2018 Sales Revenue Cost of Goods Sold Gross Profit Advertising Expense Insurance Expense Salaries & Wages Expense Utilities Expense Supplies Expense Payroll Tax Expense Repairs & Maintenance Expense Legal Expense Accounting Expense Rent Expense Depreciation Net Income 2500 12000 148000 5000 3300 10000 8500 15000 5000 24000 125 233425 2316575 Statement of Retained Earnings For the period ending 31.12.2018 Beginning Balance Net Income 2402500 2316575 4719075

Amounts in $ Amounts in $ 25000 300000 500000 825000 Balance sheet As at 31.12.2018 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 3094500 Accounts Payable Inventory 100000 Notes Payable Prepaid Insurance 12000 Loan from Owner Supplies 200 3206700 Shareholders Equity Non Current Assets Preferred Stock, 3% cumulative, $1 par value Equipment 3000000 Common Stock, $0.01 par value; Accumulated Deprecia -50000 2950000 Additional Paid In Capital Truck 20000 Retained Earnings Accumulated Deprecia -125 19875 Treasury Stock (8 million shares at cost) Total Assets 6176575 Total Liabilities & Equity 25000 110000 545000 4719075 -47500 5351575 6176575