Accounting Cycle Project

$($Due date: Sunday, February $25)$

The Queen of the Snows started a business, Winter Carnival Co$.,$ a company that specializes in

merchandise for ice$-$fishing, snow$-$sliding, treasure$-$hunting and other winter activities. In $2023,$

the company had the following beginning balances $($in dollar$).$

During $2023,$ the following transactions occurred.

Winter Carnival borrowed $$500,000$ on February $1,2023$ from a local bank, on a $2\%$ note

for $5$ years. Winter Carnival would pay interest semi$-$annually on each August $1$ and

February $1.$

Winter Carnival delivered merchandise and earned sales revenue, totaled $$300,000,$ of

which $$250,000$ was on credit. Cost, to Winter Carnival Co$.,$ of the merchandise sold,

totaled $$150,000.$

In addition, Winter Carnival signed a sales contract with a customer, Mini$-$Soda Company

to deliver a total of $$60,000$ merchandise in January $2024.$ Winter Carnival collected

$$18,000$ cash in advance from this customer on October $17,2023.$

Winter Carnival acquired additional merchandise, totaled $$100,000,$ of which $$90,000$ was

on account.

Winter Carnival paid $$80,000$ on its accounts payable to its suppliers.

Winter Carnival collected a total of $$200,000$ on its accounts receivable from its various

customers.

Winter Carnival paid its employees $$90,000$ cash for their salary. At the end of year $2023,$

the company still owed $$2,500$ salary payable to its employees.

Winter Carnival incurred insurance expenses of $$6,000,$ all paid in cash in $2023.$

The following information was also available during $2023$for Winter Carnival Co$.$

Its 'prepaid advertisement' had $18$ months remaining at the beginning of the year $2023.$

The existing machine had an estimated life of $10$ years with no residual value and had been

depreciated using the straight$-$line method.

Its ending balance of 'allowance for doubtful accounts' was estimated to be $5\%$ of its

outstanding $\frac{A}{R}$ at the end of $2023.$

The income tax rate was $20\%$ for Winter Carnival and the company would pay its income

tax $1.$ Based on above transactions, prepare journal entries and adjusting entries in $2023$ for

Winter Carnival.

$2.$ Set up T$-$accounts and post your journal entries and adjusting entries to T$-$accounts. $($A kind

reminder: Don$$t forget the beginning balances.$)$

$3.$ Prepare a pre$-$closing trial balance, as of December $31,2023.$

$4.$ Prepare an income statement, in a good format, for the year ended December $31,2023$ for

Winter Carnival.

$5.$ Prepare a statement of retained earnings, in a good format, for the same period for Winter

Carnival.

$6.$ Prepare a balance sheet, in a good format, as of December $31,2023$ for Winter Carnival.

$7.$ Prepare closing entries and a post$-$closing trial balance, as of December $31,2023.$

$8.$ Please note that late submissions, without a valid excuse, are subject to point deductions.

One point will be deducted, from the total points that you earn on this project, per day after

the due date.in the first quarter of $2024.$