Question

AP3-14A Journaliing, posting, preparing statement of me and statement of financial position, and preparing closing entries) Perfect Pizza had the following account balances at December 31, 2019: Cash Accounts Receivable Inventory Prepaid Rent Equipment Accumulated Depreciation, Equipment $33,000 15,000 10,000 3,000 60,000 30,000 Vehicles Accumulated Depreciation, Vehicles Accounts Payable Wages Payable Common Shares Retained Earnings 80,000 36,000 7.000 2.000 110,000 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 $220,000 6. Collections from customers for sales on account totallod $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 through 8. Create new accounts as necessary b. Prepare adjusting journal entries for adjustments 9 to 12. c. Set up Taccounts, 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. C. Prepare the closing entries, post them to the T accounts, and calculate the final balance account 2. Prepare a statement of financial position for 2020.

Answer 1

Journal Entries
No.	Accounts	Debit ($)	Credit ($)
1	Inventory Dr	230000
	To Accounts Payable		230000
	(Being purchase of inventory on account.)
2	Cash Dr	510000
	Accounts Receivable Dr	40000
	To Sales		550000
	(Being sales recorded.)
3	Wages Dr	103000
	Wages Payble	2000
	To Cash		105000
	(Being payment of wages)
4	Utilities Expense Dr	25000
	To Cash		25000
	(Being Utilities expense paid.)
5	Accounts Payable Dr	220000
	To Cash		220000
	(Being payment to suppliers.)
6	Cash Dr	38000
	To Accounts Receivable		38000
	(Being receipt from customers.)
7	Cost of Goods sold Dr	225000
	To Inventory		225000
	(Being inventory used.)
8	Dividend Dr	15000
	To Cash		15000
	(Being payment of dividend.)
9	Rent Expense Dr	1500
	To Prepaid Rent		1500
	(Being rent for the year.)
10	Wages Dr	2500
	To Wages Payable		2500
	(Being wages owed.)
11	Depreciation Dr	7500		=60000/8
	To Accumulated Dep.-Equipment		7500
	(Being depreciation for equipment.)
12	Depreciation Dr	12000		=(80000-8000)/6
	To Accumulated Dep.-Vehicles		12000
	(Being depreciation for Vehicles.)
Closing Entries
1	Sales Dr	5,50,000
	To Retained Earnings		5,50,000
	(Being sales a/c closed.)
2	Cost of Goods sold Dr	225000
	Wages Dr	105500
	Utilities Expense Dr	25000
	Rent Dr	1500
	Depreciation Dr	19500
	Dividend Dr	15000
	To Retained Earnings		391500
	(Being accounts transferred to retained earnings.)