James Ling had loved photography ever since he received his first camera as a gift from his grandmother for his fourth birthday. When he was young he took pictures of everything that interested him, and he stored them in virtual photo albums that he enjoyed looking at. He continually challenged himself to take better and better pictures. At one point he took 100 pictures of lily pads and made an entire exhibit of them. He spent so much time taking pictures that soon his nickname became Shutterbug. It was a name that he loved.

By the time James was in his final year of university he was asked to take pictures at so many events that he decided to start a business and he began charging for his services. On July 1, 2015, James offi cially launched his business, which he immediately named Shutterbug. He has now graduated and runs Shutterbug on a full-time basis. Information about the business is in Exhibit I.

It is now the beginning of July 2017, and James would like to know how Shutterbug has done during its second fiscal year. He knows that he has been busy, and he knows that he has had fun, but he also wants to know about the financial success of his business so that he can make some important decisions about whether to expand during the upcoming fiscal year. He would also like to know how much he will have to pay in tax, at a rate of 30%. Throughout the year, James withdrew a personal salary of $2,500 per month.

James is eager to see the fi nancial results of the year ended June 30, 2017, his second year of business. He has provided you with a trial balance of his accounts at June 30, 2016 (Exhibit II) and has asked you to prepare journal entries for all transactions, as well as any adjusting or closing entries, for the year ended June 30, 2017. He would also like you to prepare T accounts and financial statements. Please do your very best work so that James will be impressed and will ask you to prepare his financial statements again next year.

Required Prepare:

(a)

all journal entries, including closing entries

(b)

a T account work sheet for all of the transactions

(c)

a statement of income

(d)

a statement of fi nancial position

(e)

a memo to James indicating how much he will have to pay in tax