The problem to be resolved: The following trial balance was extracted from the books of Columbus Ltd at December 31, the end of the company’s financial year. The company is owned by John Columbus and is in the business of buying and farming supplies. Trial Balance as at December 31, 2018 Trial balance A/C Name Dr Cr Cash 1,000,000   Accounts receivable 450,000   Allowance for bad debt   15,000 Merchandise inventory 186,000   Store supplies 120,000   Prepaid insurance 450,000   Furniture and fixtures 1,000,000   Accumulated depreciation - furniture and fixtures   360,000 Computer equipment 600,000   Accumulated depreciation computer equipment     Accounts payable   320,000 Wages payable     Unearned sales revenue   150,000 Notes payable, long term   900,000 John Columbus, capital   2,200,000 John Columbus, withdrawals 95,000   Sales revenue   1,761,000 Sales discount 120,000   Sales returns and allowances 95,000   Cost of goods sold 650,000   Wages expense 450,000   Insurance expense 180,000   Depreciation expense - furniture and fixtures     Depreciation expense - computer equipment      Store supplies 40,000   Utilities expense 180,000   Bad debt expense     Interest expense 90,000   Total 5,706,000 5,706,000 The following additional information is available at December 31, 2018:                                         Insurance of $450,000 was paid on May 1, 2018 for the 10-months to February 2019. The furniture and fixtures have an estimated useful life of 10 years and is being depreciated on the straight-line method down to a residual value of $100,000. The computer equipment was acquired on March 1, 2018 and is being depreciated over 10 years on the double-declining method of depreciation, down to a residue of $60,000. Wages earned by employees NOT yet paid amounted to 15,000 at December 31, 2018. A physical count of inventory at December 31, reveals $180,000 worth of inventory on hand. At December 31, $140,000 of the previously unearned sales revenue had been earned. The aging of the Accounts Receivable schedule at December 31 indicated that the estimated uncollectible on account receivable should be $45,000. REQUIRED: Prepare the necessary adjusting journal entries on December 31. [Narrations are not required] Prepare Columbus Ltd multiple-step income statement for the year ended December 31, 2018. Prepare Columbus Ltd statement of owner’s equity for the year ended December 31, 2018. Prepare Columbus Ltd classified balance sheet at December 31, 2018. Prepare the closing entries Prepare the post-closing trial balance

College Accounting (Book Only): A Career Approach
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ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter11: Work Sheet And Adjusting Entries
Section: Chapter Questions
Problem 1PA: The trial balance of Hadden Company as of December 31, the end of its current fiscal year, is as...
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The problem to be resolved:

The following trial balance was extracted from the books of Columbus Ltd at December 31, the end of the company’s financial year. The company is owned by John Columbus and is in the business of buying and farming supplies.

Trial Balance as at December 31, 2018

Trial balance

A/C Name Dr Cr
Cash

1,000,000

 
Accounts receivable 450,000  
Allowance for bad debt   15,000
Merchandise inventory 186,000  
Store supplies 120,000  
Prepaid insurance 450,000  
Furniture and fixtures 1,000,000  
Accumulated depreciation - furniture and fixtures   360,000
Computer equipment 600,000  
Accumulated depreciation computer equipment    
Accounts payable   320,000
Wages payable    
Unearned sales revenue   150,000
Notes payable, long term   900,000
John Columbus, capital   2,200,000
John Columbus, withdrawals 95,000  
Sales revenue   1,761,000
Sales discount 120,000  
Sales returns and allowances 95,000  
Cost of goods sold 650,000  
Wages expense 450,000  
Insurance expense 180,000  
Depreciation expense - furniture and fixtures    
Depreciation expense - computer equipment     
Store supplies 40,000  
Utilities expense 180,000  
Bad debt expense    
Interest expense 90,000  
Total 5,706,000 5,706,000

The following additional information is available at December 31, 2018:                                        

  • Insurance of $450,000 was paid on May 1, 2018 for the 10-months to February 2019.
  • The furniture and fixtures have an estimated useful life of 10 years and is being depreciated on the straight-line method down to a residual value of $100,000.
  • The computer equipment was acquired on March 1, 2018 and is being depreciated over 10 years on the double-declining method of depreciation, down to a residue of $60,000.
  • Wages earned by employees NOT yet paid amounted to 15,000 at December 31, 2018.
  • A physical count of inventory at December 31, reveals $180,000 worth of inventory on hand.
  • At December 31, $140,000 of the previously unearned sales revenue had been earned.
  • The aging of the Accounts Receivable schedule at December 31 indicated that the estimated uncollectible on account receivable should be $45,000.

REQUIRED:

  1. Prepare the necessary adjusting journal entries on December 31. [Narrations are not required]
  2. Prepare Columbus Ltd multiple-step income statement for the year ended December 31, 2018.
  3. Prepare Columbus Ltd statement of owner’s equity for the year ended December 31, 2018.
  4. Prepare Columbus Ltd classified balance sheet at December 31, 2018.
  5. Prepare the closing entries
  6. Prepare the post-closing trial balance
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