Question

Question requirements at bottom of text and numbered...

Paul’s Fishing Gear and Tackle Repair Inc.

Winter 2018

Paul’s Fishing Gear and Tackle Repair, Inc. is a fishing supply and repair store, run by its primary shareholder and manager Paul Martin. Presented below is the November 30, 2017, unadjusted trial balance of Paul’s Fishing Gear and Tackle Repair, Inc. The account balances represent the results of entries recorded during the first 11 months of the year. The balance in Paul’s common stock and retained earnings accounts have not changed since December 31, 2016. Currently, 16,000 shares of stock are outstanding and 25,000 have been authorized. Paul’s board of directors have decided to reinvest this year’s profit for future use and will not pay dividends to shareholder’s (Trey, Will, Megan, and Ben, all friends of Paul) at the end of this year. All income tax effects are to be ignored for this project.

Unadjusted Trial Balance
November 30, 2017

REF
DEBIT
CREDIT
Cash 111 16,200
Accounts Receivable 112 5,750
Supplies Inventory 113 2,300
Prepaid Rent 114 3,600
Equipment 115 75,000
Accumulated Depreciation, Equipment 116 15,000
Building 117 221,400
Accumulated Depreciation, Building 118 40,000
Accounts Payable 211 11,750
Wages Payable 212
Utilities Payable 213
Interest Payable 214
Unearned Repair Revenue 220 2,500
Long- Term Notes Payable 231 95,000
Common Stock ($5 par value) 311 80,000
Retained Earnings 312 36,695
Income Summary 313
Dividends 314
Repair Revenue 411 145,000
Wages Expense 511 80,300
Rent Expense 512 13,000
Supplies Expense 513
Utilities Expense 514 3,000
Advertising Expense 515 1,500
Maintenance Expense 516 95
Depreciation Expense, Equipment 517
Depreciation Expense, Building 518
Interest Expense 519 3,800
Totals $425,945 $425,945

The following transactions occurred during the month of December 2017:
December 3 Purchased $1,800 of supplies on account.
• Paid accounts payable of $3,500.
• Received $34,600 for repair revenue.
• Charged a customer $450 for repairs to deep-sea fish finder. This bill will not be paid until early January.
• Purchased $5,400 of supplies on account.
• Paid $400 for newspaper advertisements that ran on November 9.
• Paid utility expense of $350.
• Received $56,000 for repair revenue.
• Paid wages of $2,925 for period of December 1-14
• Received $1,900 cash on account.
• Paid $4,200 of the amount owed from December 10.
• Acquired additional equipment costing $7,600 by paying $1,000 in cash and giving a long-term note payable for the remainder of the balance.
• Received bill and paid $995 for repairs to electronic scales.
• Sold 700 shares of $5 par value common stock for $5 a share for a new shareholder, Kent Clark.
• Received $24,000 for repair revenue.
30 Charged a customer $195 for repairs to a fishing rod. The balance will not
be paid until January.
• Paid wages of $3,100 for the period of December 15-30.
31 Declared and paid a $2,300 dividend to shareholders.

REQUIREMENTS
1. Prepare and post journal entries to record the December transactions listed above.

2. Prepare a 6 column worksheet (page 15). Enter the December 31 balances from the general ledger (pp. 8-14) in the unadjusted trial balance columns of the worksheet. Total the debits and credits to assure that debits equal credits. Also enter adjustments A-H on the worksheet and complete the worksheet.[1]
1. Depreciation for the year on the building was $17,500
2. Interest expense to be accrued on the note payable for 2017 is $400.
3. The December 31 supply inventory was $1,900.
4. Depreciation for the year on equipment was $5,250
5. Unpaid wages were $350 as of December 31.
6. Unpaid utilities expense for December 13-30 was $245.
7. Prepaid rent that has expired through December 31 amounts to $2,200.
8. Unearned repair revenue represents a payment received in advance on November 17 for repairs to a multifacited, computerized swivel with built in cup holder. The job was not complete as of December 31. However 2/5 ($1,000) has been completed and earned as of December 31.

3. Journalize and post the adjusting entries. In other words, record the above adjustments in the general journal and post those entries to the general ledger. So, these adjustments will be recorded both in (1) the 6 column worksheet, and (2) the general journal and general ledger.

4. Prepare an income statement, statement of retained earnings, and a classified balance sheet for the year ended December 31, 2017.

5. Journalize and post the closing entries. In other words, close the revenues and expenses, using journal entries recorded in the general journal and posted to the general ledger.
Prepare post-closing

Answer 1