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Question: The following information is given for Aphria Farming Services Inc. for the year ended December 3...

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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.

Cash

Accounts Payable

Accounts Receivable

Event

Debit

Credit

Event

Event

Debit

Credit

Event

Event

Debit

Credit

Event

Beg.Bal.

2200

7400

d

g

73000

23700

Beg.Bal.

Beg.Bal.

4400

199100

b

a

62300

14200

e

62900

c

a

210300

b

199100

112000

e

15100

f

73000

g

73000

86600

214700

199100

5400

h

13600

End Bal.

End Bal.

15600

17000

j

7200

k

Income Tax payable

Interest payable

263600

251300

Event

Debit

Credit

Event

Event

Debit

Credit

Event

End Bal.

12300

f

15100

15100

Beg.Bal.

h

2700

2700

Beg.Bal.

Prepaid Supplies(Feed and Straw)

16500

5

2700

4

Event

Debit

Credit

Event

2700

5400

Beg.Bal.

27800

67700

1

15100

31600

2700

End Bal.

c

62900

16500

End Bal.

d

7400

Building

98100

67700

Event

Debit

Credit

Event

Note Payable

End.Bal.

30400

Beg.Bal.

115000

Event

Debit

Credit

Event

Land

60000

Beg.Bal.

Event

Debit

Credit

Event

115000

Beg.Bal.

167000

End Bal.

115000

0

60000

Accumulated Depreciation- building

60000

End Bal.

167000

Event

Debit

Credit

Event

End Bal.

167000

36000

Beg.Bal.

6000

2

Common Shares

0

42000

Event

Debit

Credit

Event

42000

End Bal.

150000

Beg.Bal.

0

150000

150000

End Bal.

Retained Earnings

Accumulated Depreciation - Equiment

Event

Debit

Credit

Event

Event

Debit

Credit

Event

Equipment

55200

Beg.Bal.

16500

Beg.Bal.

Event

Debit

Credit

Event

5500

2

Beg.Bal.

57000

22000

22000

End Bal.

57000

Rent Revenue

End Bal.

57000

Event

Debit

Credit

Event

Service Revenue

62300

a

Interest expense

Event

Debit

Credit

Event

62300

Event

Debit

Credit

Event

210300

a

h

2700

210300

Wages Expense

4

2700

Event

Debit

Credit

Event

5400

Wages Payable

e

112000

Event

Debit

Credit

Event

3

4000

e

14200

14200

Beg.Bal.

116000

Supplies expense

4000

3

Dividends

Event

Debit

Credit

Event

14200

18200

Event

Debit

Credit

Event

1

67700

4000

End Bal.

k

7200

67700

Property Taxes expense

7200

0

Event

Debit

Credit

Event

j

17000

Depreciation expense

Income tax expense

17000

0

Event

Debit

Credit

Event

Event

Debit

Credit

Event

2

11500

5

16500

11500

0

16500

0

Aphria Farming Services Inc.
General Journal entries for the year ending December 31, 2018
Event	Account Title	Debit	Credit
a	Accounts Receivable	210300
	Service Revenue		210300
	(Farming services performed on account)
	Cash	62300
	Rent Revenue		62300
	(Stables rented for cash)
b	Cash	197100
	Accounts Receivable		197100
	(Cash collected from customers on account)
c	Prepaid Supplies	62900
	Accounts Payable		62900
	(Fed purchased on account)
d	Prepaid Supplies	7400
	Cash		7400
	(Straw purchased for cash)
e	Wages Payable	14200
	Cash		14200
	(Payment of beginning balance of wages payable )
	Wages Expense	112000
	Cash		112000
	(Wages expense paid during the year)
f	Income tax payable	15100
	Cash		15100
	(Payment of beginning income tax payable)
g	Acounts Payable	73000
	Cash		73000
	(Payments made to accounts payable on account)
h	Interest Expense	2700
	Interest Payable	2700
	Cash		5400
	(Interest @9% paid on note payable for one year)
i	No entry required.
j	Property taxes	17000
	Cash		17000
	(Property taxes paid for the year)
k	Dividends	7200
	Cash		7200
	(Payment of dividends)

2.

Aphria Farming Services Inc.
Adjusting entries for the year ending December31, 2018
Event	Account Title	Debit	Credit
1	Supplies Expenses	67700
	Prepaid Supplies		67700
	(Supplies used during the year recorded)
2	Depreciation expense	11500
	Accumultaed depreciation - buildings		11500
	Accumultaed depreciation - equipment
3	Wages Expense	4000
	Wages Payable		4000
	(Wages accrued as at the year end)
4	Interest Expense	2700
	Interest Payable		2700
	(Interest for six months to be paid next year)
5	Income tax expense	16500
	Income payable		16500
	(Income tax for the year recrded)

3.

Aphria Farming Services Inc.
Income statement for the ending December 31, 2016
Service Revenue		210300
Rent Revenue		62300
Total Revenue		272600
Expenses:
Wages expense	116000
Supplies expense	67700
Prpoerty expese	17000
Depreciation expense	11500
Interest Expense	5400
Income tax expense	16500
Total expenses		234100
Net income		38500

4.

Aphria Farming Services Inc.
Statement of retained earnings for the year ended December 31, 2018
Balance as at January 1	55200
Net income for the year	38500
Dividends paid	-7200
Balance as at December 31	86500

5.

Aphria Farming Services Inc.
Balance sheet as at December 31, 2018
Assets
Cash		12300
Accounts Receivable		15600
Prepaid Supplies		30400
Current Assets		58300
Land		167000
Building	115000
Accumulated Depreciation - Building	42000	73000
Equipment	57000
Accumulated Depreciation - Equipment	22000	35000
Total Assets		333300
Liabilities and stockholders' equity
Accounts Payable		13600
Wages Payable		4000
Income tax payable		16500
Interest Payable		2700
Total Current Liabilities		36800
Note Payable		60000
Total Liabilities		96800
Stockholders' equity
Common Stock		150000
Retained earnings		86500
Total stockholders' equity		236500
Total liabilities and Stockholders' equity		333300