Question

The following information is given for Aphria Farming Services Inc. for the year ended December 31, 2018. The account balances (all of which had their normal balance of debit or credit) at the beginning of 2018 (January 1, 2018) were as follows:

Cash                                                             $      2,200

Accounts Payable                                        $     23,700

Accounts Receivable                                   $       4,400

Income Tax Payable                                    $    15,100

Prepaid Supplies (Feed and Straw)            $     27,800

Interest Payable                                           $       2,700

Land (cost)                                                  $   167,000

Wages Payable                                            $    14,200

Buildings (cost)                                           $   115,000

Notes Payable (due in 2022)                       $    60,000

Accumulated Depreciation (Buildings )     $    36,000

Common Shares                                          $   150,000

Equipment                                                   $    57,000

Retained Earnings, 12/31/2017                   $     55,200

Accumulated Depreciation (Equipment)    $     16,500

During the year ended December 31, 2018, the following transactions occurred:

a. Aphria provided farming services to customers, all on credit, for $210,300. Aphria rented stables to

customers for $20,500 paid in cash. Aphria rented its grounds to individual riders, groups, and show

organizations for $41,800 paid in cash.

b. There remains $15,600 of accounts receivable to be collected at December 31, 2018.

c. Feed in the amount of $62,900 was purchased from suppliers on credit and debited to the prepaid supplies account.

d. Straw was purchased for $7,400 cash and debited to the prepaid supplies account.

e. Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned by employees and

paid during 2018 in the amount of $112,000.

f. The income tax payable at the beginning of 2018 was paid early in 2018.

g. Payments of $73,000 were made to creditors for supplies previously purchased on credit.

h. One year’s interest at 9% was paid on the notes payable on July 1, 2018.

i. During 2018, Jon Aphria, a principal shareholder, purchased a used car for his wife, Jennifer. The car cost $7,000, and Jon used his personal credit to purchase it.

j. Property taxes were paid by cheque on the land and buildings in the amount of $17,000.

k. Dividends were declared and paid by cheque in the amount of $7,200.

Year End (December 31, 2018) Data

The following data is available for preparation of adjusting journal entries at December 31, 2018:

. Supplies (feed and straw) in the amount of $30,400 remained unused at year-end.

. Annual depreciation on the buildings is $6,000.

. Annual depreciation on the equipment is $5,500.

. Wages of $4,000 were unrecorded and unpaid at year-end.

. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end.

. Income taxes of $16,500 were unpaid and unrecorded at year-end.   

Required:

1.Post the beginning balances at January 1, 2018 to T accounts. Prepare required journal entries for all transactions a to k and post the journal entries to the relevant T accounts. Add any new T accounts you need.

2.Prepare all required adjusting journal entries at December 31, 2018 and post the adjusting journal entries to the T accounts. Add any new T accounts you need..

3. Prepare, in proper financial statement format, a single step statement of earnings for the year ended December 31, 2018..

4. Prepare, in proper financial statement format, a statement of retained earnings for the year ended December 31, 2018.

5. Prepare, in proper financial statement format, a classified statement of financial position as at December 31, 2018.

Answer 1

(1) Post the beginning balances at January 1, 2018 to T accounts. Prepare required journal entries for all transactions a to k and post the journal entries to the relevant T accounts Prepare the following journal entries Date Account title Debit (S) Credit (S) a Accounts receivable 210.300 210.300 o record the framing service revenue earned on account Cash 20.500 20.500 o record the stables rent revenue Cash 41,800 41,800 o record the ground rent revenue b 199,100 Cash (S4,400+$210,300 - $15,600 Accounts receivable 199,100 o record the cash collected from customers d supplies 62.900 Accounts payable o record the of feed on account.] d supplies 7.400 Cash 7,400 o record the of feed in cash e Wages payable Wages Cash 14.200 112,000 126,200 o record the t of wages including outstanding in cash f 15.100 Income tax pavable Cash 15.100 o record the t of income tax due 73,000 Cash 73.000 o record the t for accounts pavable 700 700 h Interest Interest Cash vable [($60,000 × 9%)-2 ($60,000 x 9%)-2 5,400 o record the t of interest including due 7.200 k Dividends Cash 7.200 o record the t of dividends

Prepare the following T-Accounts: Cash Accounts Pavable Beg Bal. 2,200d 7,400 126,200 15,100 73,000 5,400 17,000 7,200 263,600 Beg Bal. 23,700 62,900 20,500e 41,800f 99,100g 75,300c 263,600 End Bal. 12,300 86,600 End Bal.11,300 86,600 Accounts Receivable Income Tax Payable Beg Bal.4 4,400 210,300 199,100 Beg Bal.15,100 5,100 Adj 16,500 214.700 End Bal.15,600 31,600 16.500 214,700 31,600 End Bal. aid Supplies Interest Pavable Beg Bal. 2,700 2,700 Beg Bal.27,800Adj67,700 2,700 Adj 7400 98,100 30,400 98,100 5,400 End Bal. End Bal.2,700 Land Wages Payable 14,200Ad 18,200 Beg Bal. 14,200 4.000 Beg Bal. 167,000 167,000 End Bal. 167,000 167,000 18,200 End Bal. 4,000 Buildings Notes Payable (Long-term) Beg Bal. 115,000 Beg Bal. 60,000 115,000 End Bal. 115,000 115,000 60.000 60.000 60,000 End Bal. Equipment Accumulated D iation - Buildin Beg Bal. 57,000 Beg Bal.36,000 6,000 42,000 End Bal. 42,000 Adj 42,000 57,000 57,000 57,000 End Bal.

Accumulated Depreciation - Equipment Beg Bal. 16,500 Adj 5,500 22,000 Beg Bal. e 112,000 4000 116,000 End Ba 116,000 22,000 116,000 End Bal. 22,000 Interest Expense Common Shares Beg Bal. Beg Bal. 150,000 2,700 2700 5,400 End Bal. 5,400 150,000 End Bal. 150.000 5,400 Property Ta Expense Retained Earnings Beg Bal. Beg Bal. 55,200 17,000 55.200 55,200 End Bal. 55,200 17,000 End Bal. 17,000 17,000 Dividends Revenues Beg Bal. 210,300 20,500 41,800 272,600 End Bl 272,600 272,600 7,200 7,200 7,200 End Bal Supplies Expense Depreciation Expense Beg Bal. Beg Bal. Adj 6,000 Ad 5,500 11,500 End Bal. 11,500 Adj 67,700 絹, 67,700 End Bal 67,700 11,500 Income Tax Expense Beg Bal. Adj16,500 16,500 16,500 End Bal 16.500

(2) Prepare all required adjusting journal entries at December 31,2018 and post the adjusting journal entries to the T accounts Date Account title Debit (S) Credit (S) Supplies 67,700 d supplies 67,700 o record the supplies 6,000 Accumulated tion Buildings 6,000 o record the tion on Buildings Accumulated tion E 5.500 o record the tion on 4 Wages 4.000 Wages pavable 4.000 o record the accrued wages payable 5 Interest ($60,000 x 9% 700 Interest payable 700 o record the accrued interest 6 Income tax Income tax payable 6.500 6.500 o record the income tax payable (3) Prepare, in proper financial statement format, a single step statement of earnings for the year ended December 31,2018 ervices Inc. Income Statement For the vear ended December 31,2018 Particulars Amount (SAmount (S) 272.600 Revenues 116,000 67,700 17,000 11.500 5,400 6.500 age Supplies es tax Interest Income tax Total se 234,100 38,500 ting Net income

(4) Prepare, in proper financial statement format, a statement of retained earnings for the year ended December 31,2018 F Services Inc. Statement of Retained Earnin For the vear ended December 31,2018 Particulars Amount (SAmount (S) 55.200 Retained earnings, Beginning balance Add: Net income Less: Dividends Retained earnings, Ending balance 38,500 7.200) 31,300 86.500 (5) Prepare, in proper financial statement format, a classified statement of financial position as at December 31,2018 AF Services Inc. Balance Sheet December 31,2018 Amount (SAmount (S) Amount (S) Assets Current assets Cash Accounts receivable 12,300 15.600 30.400 d supplies Total curent assets 58.300 Non-current assets y. Plant and Equipment Land Buildings Less: Accumulated 67,000 115,000 73.000 57,000 (22,000) Less: Accumulated tion 35.000 Total non-current assets 275,000 333.300 Total assets Liabilities Current liabilities: Accounts payable Wages pavable Interest payable Income tax payable 13,600 4.000 700 6.500 Total curent liabilities 36,800 Non-current liabilities: Notes pavable 60.000 Total liabilities Stockholders Equitv Common stock Retained earnings 150,000 86.500 Total stockholders Total liabilities and stockholders equity $236,500 $333,300