180 1. Following is Lawn Pro's post-closing trial balance at the end of 2017 (also the start of 2018). Lawn Pro, Inc. Post-Closing Trial Balance as of December 31, 2017 Account Debit Credit Cash 14,600 Accounts receivable 2,800 Supplies Prepaid rent 800 Inventory 0 Land 4,000 Accounts payable Salaries payable 1,040 Unearned revenue 900 Common stock 8,000 Retained earnings 12,440 Dividends declared Service revenue Product sales Sales returns Cost of goods sold Supplies expense 0 Salaries expense Rent expense Utilities expense Advertising expense Other operating expenses TOTALS 22,380 22,380 2. Following is a list of events that occurred during 2018. a) Jan 6, 2018 - Lawn Pro paid the salaries payable from 2017. b) Jan. 14, 2018 - The company acquired an additional $50,000 cash from the issue of common stock. c) Jan 17, 2018 - The company paid $900 cash for supplies to be used by the business. d) Jan 21, 2018 - Lawn Pro purchased 25 patio furniture sets for later sale at a cost of $12,120. The patio furniture sets were purchased on account with the terms 2/10, n/30. e) Jan. 29, 2018 - Lawn Pro decided to pay $6,000 of its accounts payable balance from event (d) before the discount period expired, so Lawn Pro first applied the 2% discount to the $6,000 amount so it could reduce its accounts payable balance (note: the actual payment is described in event (f) below). After applying this discount, Lawn Pro's inventory cost was $480 for each item. f) Jan. 29, 2018 - Lawn Pro paid cash to settle parts of its accounts payable balance as described in event (e) B) Feb. 12, 2018 - The company sold 20 patio furniture sets for a total price of $18,000. Sales of $13,000 were on account, while $5,000 were cash sales. Lawn Pro uses the FIFO inventory method. h) Feb. 12, 2018 - The cost to Lawn Pro of each product sold in event () was $480. 1) Feb. 17, 2018 - The company paid the workers a total of $8,400 in salaries. 1) Feb. 28, 2018 - The company sold $36,000 of lawn care services to begin Mar. 1. The services are billed to the customers each month. k) Mar. 1, 2018 - Lawn Pro leased a business van, paying $4,800 for one year's lease in advance. 1) Mar. 4, 2018 - Paid cash to settle additional accounts payable in the amount of $3,780. The payment was made after the discount period expired. m) Mar. 11, 2018 - Collected $38,000 of accounts receivable. n) Apr. 9, 2018 - Lawn Pro performed $14,000 worth of lawn care services for a local college; $12,000 was on account and $2,000 was for cash. o) May 1, 2018 - Paid $7,200 for one year's rent on office space in advance. p) May 8, 2018 - Lawn Pro purchased 10 patio furniture sets for later sale at a cost of $500 each. g) May. 17, 2018 - The company paid accounts payable of $1,440, but not within the discount period (the company uses the gross method). n) Jun 1, 2018 - Lawn Pro rented a larger building: paid $6,600 for 12 months' rent in advance. s) Jun. 5, 2018 - Lawn Pro purchased 12 patio furniture sets for later sale at a cost of $520 each. t) Jun. 12, 2018 - Lawn Pro purchased 15 patio furniture sets for later sale at a cost of $530 each. u) Jun 23, 2018 - The company sold 30 patio furniture sets for a total price of $28.000. Sales of $20,000 were on account, while $8,000 were cash sales. v) Jun 23, 2018 - Record the cost of goods sold related to the sale from event (t) using the perpetual FIFO method. w) Jul 1, 2018 - Made a full refund to a dissatisfied customer who returned a patio furniture set. The sale had been a cash sale for $1,100 with a cost of $520. Record the reversal of revenue. x) Jul 1, 2018 - Made a full refund to a dissatisfied customer who returned a patio furniture set. The sale had been a cash sale for $1,100 with a cost of $520. Record the reversal of cost. Y) Jul 15, 2018 - Paid employees a total of $11,000 cash for salaries employees' earned during the current period. Page 3 of 13 z) Aug. 24, 2018 - Provided $32,000 of lawn care services during the year. The services were billed to the customers. aa) Sep. 30, 2018 - Recognized $800 of service revenue earned during the first nine months of the year; it had been collected in the prior year. bb) Oct. 1, 2018 - Completed additional lawn care services worth $400 for one year's service. The customers paid cash for the full amount. cc) Nov. 13, 2018 - Collected $51,000 of accounts receivable. dd) Nov. 20, 2018 - Paid an additional $5,500 to settle some accounts payable; the payment was made after the discount period expired. ee) Dec, 27, 2018 - Paid $2,800 of advertising expense during the year. ff) Dec. 28, 2018 - Paid $4,180 of utilities expense for the year. 88) Dec. 28, 2018 - Paid $12,470 of other operating expense for the year. hh) Dec. 29, 2018 - Paid a dividend of $12,000 to the shareholders. ii) Dec. 31, 2018 - There was $200 of supplies on hand at the end of the year. ii) Dec 31, 2018 - Recognized the expired rent from the prior year, van (event (k)), office space (event (o)), and the building (event (r)) for the year. kk) Dec 31, 2018 - Recognized the revenue earned from event (z). II) Dec 31, 2018 - Accrued salaries at December 31 were $1,200. 5. A worksheet to prepare the 2018 Adjusted Trial Balance. (hint: use the basic accounting equation spreadsheet grid to calculate the account totals) Lawn Pro, Inc. Adjusted Trial Balance as of December 31, 2018 Account Debit Credit Cash Accounts receivable Supplies Prepaid rent Inventory Land Accounts payable Salaries payable Unearned revenue Common stock Retained earnings Dividends declared Service revenue Product sales Sales returns Cost of goods sold Supplies expense Salaries expense Rent expense Utilities expense Advertising expense Other operating expenses Totals Page 10 of 13 6. Worksheets to prepare the 2018 financial statements. Lawn Pro, Inc. Income Statement For the Year Ended December 31, 2018 Service revenue Product sales, net Cost of goods Gross Margin Supplies expense Salaries expense Rent expense Utilities expense Advertising expense Other operating expenses Net Income Lawn Pro, Inc. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2018 Beginning common stock Plus: Common stock issued Ending Common Stock Beginning retained earnings Plus: Net Income Less: Dividends Ending Retained Earnings TOTAL STOCKHOLDERS' EQUITY Page 11 of 13 Lawn Pro, Inc. Balance Sheet As of December 31, 2018 Cash Accounts receivable Supplies Prepaid rent Inventory Land TOTAL ASSETS Accounts payable Salaries payable Unearned revenue Subtotal Liabilities Retained earnings Common stock Subtotal Equity TOTAL LIABILITIES AND EQUITY Lawn Pro, Inc. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities Cash receipts from customers Cash payments for expenses Net cash flow from operating activities Net cash flow from investing activities Cash flows from financing activities Cash receipts from stock issued Cash payments for dividends Net cash flow from financing activities Net increase in cash Plus: beginning cash balance Ending cash balance Page 12 of 13 Acct 2400 Project 2 - Merchandise Inventory & Sale 7. A worksheet to prepare the 2018 closing journal entries. a) Close revenue-related accounts. rev b) Close expense accounts. | exp c) Close dividend account. div Page 13 of 13