Question

In: Accounting

Puppy Walk Inc. is a dog walking service and retailer of dog supplies and food operating...

Puppy Walk Inc. is a dog walking service and retailer of dog supplies and food operating out of Vancouver. The founder, Doggy Higgins is the president and owns 100% of the common shares. The company’s yearend is December 31. The inhouse bookkeeper had a car accident and is unfortunately not able to prepare the 2019 financial statements. It is now January 2020 and you have been asked to make any required adjusting journal entries and prepare the 2019 financial statements. The unadjusted trial balance for Puppy Walk is contained in the appendix: The following information has been made available for you to make any required adjusting entries. 1. The following invoices were received in January 2020 and were not accrued in 2019. Legal fees $1,200 Janitorial services $1,200 Air conditioner repairs $400 New photocopier $3,200 2. You noticed a purchase order placed by Puppy Walk was placed for a new warehouse forklift in November 2019 that will be delivered in April of 2020. At time the order was placed a $4,000 deposit was provided and it was charged to the equipment account. 3. 15% of the bank loan will be paid in 2020. The remainder will be paid over the following four years. No payments on the principal of the loan were made in 2019. 4. The interest rate on the bank loan is 7% per annuum paid quarterly. There was no payment made for the last quarter of the year 5. Depreciation on the current equipment is $21,000. 6. The now photocopier was delivered and operating November 30, 2019 and has a life of 4 years with a residual value of $400. Copyright Steve Gibson 2020 . 7. The insurance was purchased August 31, 2019 and covered two years from that date. 8. A physical review of some inventory in the warehouse that was purchased for $7,000 is now obsolete and worthless. (chapter 7 of textbook) 9. During 2019 an old photocopier that had an original cost of $3,000 and accumulated depreciation of $1,700 was thrown out. (chapter 8 of textbook). No entry was recorded at the time. 10. $11,000 of staff salaries were owed at the end of the year as well, Doggy Higgins is going to be paid a $10,000 bonus in January 2020. 11. A physical count of the supplies inventory indicated the value at year-end was $4,200. 12. In October a customer paid a $4,500 deposit for a custom dog cage to be delivered in January. At the time, this was recorded as sales. 13. Income is taxed at 25%. In Excel, prepare all the necessary journal entries, adjusted trial balance, closing entries, income statement, statement in changes in shareholders’ equity and balance sheet for December 31, 2019 and year ending December 31,2019.

Trial Balance as December 31, 2019 Debit Credit Cash 500,000 Accounts Payable 95,000 Accounts Receivable 270,000 Equipment 372,000 Accumulated Depreciation equipment 100,200 Advertising expense 25,000 Bank loan 300,000 Sales 2,650,000 Common shares 147,450 COGS 1,400,500 Dividends declared 150,000 Goodwill 185,000 Income tax expense interest expense-bank loan 15,750 inventory 320,000 Prepaid insurance 24,000 Rent expense 100,000 Retained earnings 452,000 Salaries expense 370,000 Bonus expense Supplies Inventory(A) 12,400 Customer deposits (L) Depreciation expense Legal fees Repairs expense interest payable Deposit (A) Insurance expense salary payable bonus payable supplies expense Loss on disposal of equipment Janitorial services Current portion of bank loan Income tax payable Total 3,744,650 3,744,650

Solutions

Expert Solution

Trail Balance Trail balance Adjustment entries Adjusted trail balance
Dec 31, 2019 Dr Cr Dr Cr Dr Cr
Cash 500000 500000
Accounts payable 95000 6000 101000
Accounts receivable 270000 270000
Equipment 372000 3200 7000 368200
Accumulated depreciation equipment 100200 1700 21058 119558
Advertising expense 25000 25000
Bank loan 300000 45000 255000
Sales 2650000 4500 2645500
Common shares 147450 147450
COGS 1400500 7000 1407500
Dividends declared 150000 150000
Goodwill 185000 185000
Income tax expense 165910.5 165910.5
Interest expense-bank loan 15750 5250 21000
Inventory 320000 7000 313000
Prepaid insurance 24000 4000 20000
Rent expense 100000 100000
Retained earnings 452000 452000
Salaries epxense 370000 11000 381000
Bonus expense 10000 10000
Supplies inventory 12400 8200 4200
Customer deposit 4500 4500
Depreciation expense 21058 21058
Legal Fees 1200 1200
Repairs expense 400 400
Interest payable 5250 5250
Deposit 4000 4000
Insurance expense 4000 4000
Salary payable 11000 11000
Bonus payable 10000 10000
Supplies expense 8200 8200
Loss on disposal of equipment 1300 1300
Janitorial services 1200 1200
Current portion of bank loan 45000 45000
Income tax payable 165910.5 165910.5
0
3744650 3744650 294918.5 294918.5 3962168.5 3962168.5
Assumption depreciation on current equipment does not include depreciation on photocopier machine 0
Journal entries
Legal fees 1200
Janitorial services 1200
Air conditioner repairs 400
Equipment 3200
To accounts payable 6000
(being expenses accrued and asset purchased on account)
(As accrued expense not given it is added to accounts payable alternatively it may be added to accued expenses account)
Deposit 4000
To equipment 4000
(being deposit given for asset purchase corrction entry)
Current portion of bank loan 45000
To bank loan 45000
(being bank loan current liability created)
Interest expense-bank loan 5250
To interest payable 5250
(being accrued interest for the quarter)
Depreciation expense 21000
To accumulated depreciation 21000
(depreciation on old equipment)
Depreciation expense 58
To accumulated depreciation 58
(being depreciation on new equipment rounded off)
Insurance expense 4000
To prepaid insurance 4000
(being insurance for the year expensed)
Cost of Goods sold 7000
To inventory 7000
(being obselete inventory written off/expensed)
Loss on disposal of equipment 1300
Accumulated depreciation 1700
To equipment 3000
(being asset disposed off)
Salary expense 11000
Bonus expense 10000
To salaries payable 11000
To bonus payable 10000
(being salary and bonus accrued)
Supplies expense 8200
To supplies 8200
(being supplies expensed)
Sales 4500
To customer deposit 4500
(being rectification entry for customer deposit)
Income tax expense 165910.5
To income tax payable 165910.5
(being income tax payable)
Depreciation on photo copier =(cost-residual value)/useful life
=(3200-400)/4/12
58.33
Round off 58
Income statement
Sales 2645500
COGS 1407500
Gross margin 1238000
Operating expenses
Rent expense 100000
Salaries epxense 381000
Bonus expense 10000
Depreciation expense 21058
Legal Fees 1200
Repairs expense 400
Insurance expense 4000
Supplies expense 8200
Loss on disposal of equipment 1300
Janitorial services 1200
Advertising expense 25000
Total operating expenses 553358
Operating profit 684642
Interest expense-bank loan 21000
Profit before tax 663642
Tax expense 165910.5
Profit after tax 497731.5
Statement of changes in equity
Retained earnings begg balance 452000
Net income 497731.5
Dividend declared 150000
Reatined earnings end balance 799731.5
Balancesheet
Assets
Current Assets
Cash 500000
Accounts receivable 270000
Inventory 313000
Prepaid insurance 20000
Supplies inventory 4200
Deposit 4000
Total Current Assets 1111200
Non-current Assets
Equipment 368200
Accumulated depreciation equipment -119558
Goodwill 185000
Total non-current assets 433642
Total assets 1544842
Liabilities
Current liabilities
Accounts payable 98200
Customer deposit 4500
Interest payable 5250
Salary payable 11000
Bonus payable 10000
Current portion of bank loan 45000
Income tax payable 165910.5
Accrued expenses 2800
Total current liabilities 342660.5
Non-current liabilities
Bank loan 255000
Total liabilities 597660.5
Equity
Common stock 147450
Retained earnings 799731.5
Total equity 947181.5
Liabilites+equity 1544842

Related Solutions

Puppy Walk Inc. is a dog walking service and retailer of dog supplies and food operating...
Puppy Walk Inc. is a dog walking service and retailer of dog supplies and food operating out of Vancouver. The founder, Doggy Higgins is the president and owns 100% of the common shares. The company’s yearend is December 31. The inhouse bookkeeper had a car accident and is unfortunately not able to prepare the 2019 financial statements. It is now January 2020 and you have been asked to make any required adjusting journal entries and prepare the 2019 financial statements....
Happy Dog inc produces three types of dog food. Puppy blend is produced for dogs that...
Happy Dog inc produces three types of dog food. Puppy blend is produced for dogs that are less than 1 year old. Adult bed for dogs between 1 and 8 years old, and Geriatric blend for dogs over 8 years old. Each bag has a unique recipe that requires, among other ingredients, exact quantities of certain raw materials. Formulate a linear porgramming model that produces as many bags of dog food as possible without exceeding the demand or the available...
Case — Puppy Grow Ltd. Puppy Grow Ltd (Puppy Grow) manufactures dog food and because of...
Case — Puppy Grow Ltd. Puppy Grow Ltd (Puppy Grow) manufactures dog food and because of the quality often receives special orders from kennels and dog breeders. For each type of dog food sold, each bag is carefully filled to have the precise mix of components advertised for that type of dog food. Puppy Grow’s operating capacity is 22,000 25-kilogram bags per month, and it currently is selling 20,000 bags manufactured in 20 batches of 1,000 bags each. The firm...
High-Low Method Impeccable Puppy Training, Inc. provides classes that are popular with dog owners. The number...
High-Low Method Impeccable Puppy Training, Inc. provides classes that are popular with dog owners. The number of classes offered over five months, along with the total costs of offering these classes, follows:                                        Classes Offered            Costs Incurred    April                                       10                            $9,500    May                                       8                          $9,000 June                                       20                          $18,000 July                                          13                           $12,000 August                                     18                           $17,500           1. Using the high-low method, determine AND state the cost formula (3 points): 2. Using...
Wexford Inc. is a retailer of office supplies and equipment. The following are transactions of the...
Wexford Inc. is a retailer of office supplies and equipment. The following are transactions of the company in January 2007. Borrowed $10,000 from a local bank on January 15 and signed a 3-month note with 6% annual interest rate. record any adjusting entries needed at the end of the accounting period (January 31, 2007). No explanation of the entries is required.
Case Analysis 1 Smart Supplies Inc. The Smart Supplies Inc. is operating its business in GTA...
Case Analysis 1 Smart Supplies Inc. The Smart Supplies Inc. is operating its business in GTA and dealing with different products. The company maintains its bank account with TD bank. The bank sent statement at the end of each moth. Martin the CEO of the organization normally check the cash book balance regularly in order to see everything going on smoothly. The Cashier who maintains cash book gives Martin monthly cash balance information. In the month of July 2019, Martin...
Retailing considering the Food and General Merchandise types of retailers (not Service): What type of retailer...
Retailing considering the Food and General Merchandise types of retailers (not Service): What type of retailer do you think is experiencing the biggest growth? Why? What type of retailer do you think is decreasing in popularity? Why? Now thinking of Service Retailers: Why are these types of retailers growing significantly? What specific service retailer do you think does a really good job, meaning it runs very efficiently and takes good care of its customers?
considering the Food and General Merchandise types of retailers (not Service): What type of retailer do...
considering the Food and General Merchandise types of retailers (not Service): What type of retailer do you think is experiencing the biggest growth? Why? What type of retailer do you think is decreasing in popularity? Why? Now thinking of Service Retailers: Why are these types of retailers growing significantly? What specific service retailer do you think does a really good job, meaning it runs very efficiently and takes good care of its customers?
an express dog food delivery service based in Frankfurt is considering changing its capital structure. its...
an express dog food delivery service based in Frankfurt is considering changing its capital structure. its capital structure is as follows: it has 2000 5% annual coupon 10 year bonds outstanding which currently trade at 85. the book value for these bonds is 2.0 million. its common stock sells at $20 per share with 200,000 shares issued and outstanding . its par value is 5.00 per share and 400,000 shares are authorized. its common stock has a book value o...
an express dog food delivery service based in Frankfurt is considering changing its capital structure. its...
an express dog food delivery service based in Frankfurt is considering changing its capital structure. its current capital structure is as follows: it has 2,000 5% annual coupon 10 year bonds outstanding which currently trade at 85. The book value for these bonds is $ 2.0 million. its common stock sells at $20 per share with 200,000 shares issued and outstanding. Its par value is $ 5 per share and 400,000 shares are armortized. its common stock has a book...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT