Comprehensive Problem: Reviewing the Accounting Cycle}

Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2018 were:

During 2018, the following transactions occurred:

a. Talbot provided animal care services, all on credit, for \(\$ 210,300\). Talbot rented stables to customers for \(\$ 20,500\) cash. Talbot rented its grounds to individual riders, groups, and show organizations for \(\$ 41,800\) 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 on credit and debited to the supplies account.

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

e. Wages payable at the beginning of 2018 were paid early in 2018 . Wages were earned 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 Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost \(\$ 7,000\), and Talbot used his personal credit to purchase it.
j. Property taxes were paid on the land and buildings in the amount of \(\$ 17,000\).
k. Dividends were declared and paid in the amount of \(\$ 7,200\).
The following data are available for adjusting entries:
- 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.

\section*{Required:}
1. Post the 2018 beginning balances to T-accounts. Prepare journal entries for transactions \(a\) through \(k\) and post the journal entries to T-accounts, adding any new T-accounts you need.
2. Prepare the adjustments and post the adjustments to the T-accounts, adding any new T-accounts you need.
3. Prepare a statement of earnings.
4. Prepare a statement of retained earnings.
5. Prepare a classified statement of financial position.
6. Prepare closing entries.
7. CONCEPTUAL CONNECTION Did you include transaction \(i\) among Talbot's 2018 journal entries? Why or why not?

\section*{Case

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Cash Accounts Receivable $ 2,200 Accounts Payable $ 23,700 4,400 Income Tax Payable 15,100 Supplies (Feed and Straw) 27,800 Interest Payable 2,700 Land 167,000 Wages Payable 14,200 Buildings 115,000 Notes Payable (due in 2022) 60,000 Accumulated Depreciation (Buildings) Equipment 36,000 Common Shares 150,000 57,000 Retained Earnings, 12/31/2017 55,200 Accumulated Depreciation (Equipment) 16,500