Question

AP3-1 (Juni posting preparing statement of Woumalizia, posting, preparing statemente income and statement of financial position, and preparing closing entries) Perfect Pizza had the following count balances December 31, 2019 Cash 533,000 Vies 80,000 Accounts Receivable 15,000 Accumulated Depreciation Vehicles 36,000 Inventory 10,000 Accounts Payable 7.000 Prepad Rest 3,000 Wages Payable 2,000 Equipment 60,000 Common Shares 110,000 Accumulated Depreciation Equipement 30,000 Retained Earnings 16,000 During 2020, the following transactions occurred: 1. Purchases of ingredients and supplies inventory) were $230,000, all on account. 2. Sales of pizzas for cash were $510,000, and sales of pizzas on account were $40,000 3. The company paid $105,000 for wages. 4. The company also paid $25,000 for utilities expenses 5. Payments for ingredients and supplies purchased on account totalled 5220,000 6. Collections from customers for sales on account totalled $38,000 7. Ingredients and supplies valued at $225,000 were used in making pizzas that were sold. 8. A dividend of $15,000 was declared and paid at the end of the year. Information for adjusting entries: 9. At the end of 2020, the amount of rent paid in advance was $1,500. 10. Wages owed to employees at the end of 2020 were $2,500. 11. The equipment had an estimated useful life of eight years, with no residual value. 12. The delivery vehicles had an estimated useful life of six years with a residual value of $8,000. Required a. Prepare journal entries for transactions 1 through 8. Create new accounts as necessary. b. Prepare adjusting journal entries for adjustments 9 to 12. c. Set up T accounts, enter the beginning balances from 2019. post the 2020 entries, and calculate the balance in each account d. Prepare a trial balance, and ensure that the total of the debit balances is equal to the total of the credit balances e. Prepare a statement of income for 2020. 1 Prepare the closing entries, post them to the T accounts, and calculate the final balance in each account 2. Prepare a statement of financial position for 2020.

Answer 1

Prepare journal entries as follows:

Trn.	Account Titles	Debit	Credit
1	Inventory	$230,000
	Accounts payable		$230,000
2	Cash	$510,000
	Accounts receivable	$40,000
	Sales revenue		$550,000
3	Wages expense	$105,000
	Cash		$105,000
4	Utilities expense	$25,000
	Cash		$25,000
5	Accounts payable	$220,000
	Cash		$220,000
6	Cash	$38,000
	Accounts receivable		$38,000
7	COGS	$225,000
	Inventory		$225,000
8	Dividend	$15,000
	Cash		$15,000
	Adjusting entries
9	Prepaid rent	$1,500
	Cash		$1,500
10	Wages expense	$2,500
	Wages payable		$2,500
11	Depreciation expense	$7,500
	Accumulated depreciation-equipment ($60,000/8yrs)		$7,500
12	Depreciation expense	$13,333
	Accumulated depreciation-Vehicle ($80,000/6yrs)		$13,333

__________________________________________________________________

Prepare T-accounts as follows:

Cash
Beg. Bal.	$33,000	3	$105,000
2	$510,000	4	$25,000
6	$38,000	5	$220,000
		8	$15,000
		9	$1,500
End. Bal.	$214,500
Inventory
Beg. Bal.	$10,000	7	$225,000
1	$230,000
End. Bal.	$15,000
Accounts receivable
Beg. Bal.	$15,000	6	$38,000
2	$40,000
End. Bal.	$17,000
Sales revenue
		Beg. Bal.	-
		2	$550,000
		End. Bal.	$550,000
Accounts payable
5	$220,000	Beg. Bal.	$7,000
		1	$230,000
		End. Bal.	$17,000
Wage expense
Beg. Bal.	-
3	$105,000
End. Bal.	$105,000
Wages payable
		Beg. Bal.	$2,000
		10	$2,500
		End. Bal.	$4,500
Utilities expense
Beg. Bal.	-
4	$25,000
End. Bal.	$25,000
COGS
Beg. Bal.	-
7	$225,000
End. Bal.	$225,000
Dividends
Beg. Bal.	-
8	$15,000
End. Bal.	$15,000
Depreciation expense
Beg. Bal.	-
11	$7,500
12	$13,333
End. Bal.	$20,833
Accumulated depreciation -equipment
		Beg. Bal.	$30,000
		11	$7,500
		End. Bal.	$37,500
Accumulated depreciation -Vehicles
		Beg. Bal.	$36,000
		12	$13,333
		End. Bal.	$49,333
Prepaid rent
Beg. Bal.	$3,000
9	$1,500
End. Bal.	$4,500
Equipment
Beg. Bal.	$60,000
End. Bal.	$60,000