Accounting Cycle The Swatch Group Limited (Swatch) is a publicly listed organization based in Switzerland. Swatch manufacturers and sells high quality watches. Swatch's fiscal year end is December 31. You have been hired by the Corporate Controller to provide assistance in accurately identifying and posting the adjusting entries necessary to ensure reliable financial statements are prepared for year end. You have also been asked to provide draft financial statements (see details noted below in the Required section) Swatch's account balances as of December 31, 2019 before adjusting entries are in Canadian dollars: 235,000 1,450,000 389,000 30,000 Accounts payable Accounts Receivable Accrued liabilities Accumulated depreciation plant and equipment Advertising expense Allowance for doubtful accounts Bad debt expense Bonds pavable 410,000 32,000 20,000 1,300,000 235,000 1,450,000 389,000 30,000 410,000 32,000 20,000 1,300,000 3,400,000 3,500,000 Accounts payable Accounts Receivable Accrued liabilities Accumulated depreciation-plant and equipment Advertising expense Allowance for doubtful accounts Bad debt expense Bonds payable Cash Common shares, 12,500 no par shares issued Cost of goods sold Goodwill Intangible assets Interest expense Inventory Land Office expense Office Supplies Plant and equipment Prepaid insurance Retained earnings Salaries and wages expense Sales 770,000 2,900,000 780,000 270,000 470,000 3,340,000 620,000 7,000 257,000 120,000 6,828,000 1,700,000 4,200,000 The Controller has provided the following information for year-end: 1. Swatch uses the percentage-of-receivables method to calculate the bad debt provision each year. Swatch has estimated this allowance should be $40,000 at the end of the year. 2. During the last quarter of 2019, an additional 500 shares were issued for cash at $400 per share. The accounting for this entry was missed and Swatch has not recorded the transaction. 3. The prepaid insurance account relates to an amount paid for a 12-month fire insurance policy. The policy was paid on August 1, 2019. 4. A year end count of office supplies was completed. Office supplies on hand are $5,600. 5. A dividend of $1.00 per share was declared and not yet recorded on December 15. Payment is anticipated 60 days following declaration of the dividends. 6. The building and equipment were acquired on January 1, 2016 and were being amortized on a straight-line basis over 20 years. As of January 1, 2019, Swatch revised the estimated residual value of the building to $70,000 and the remaining useful life to 10 years (total useful life of 13 years, with 3 years already depreciated). Depreciation has not yet been recorded for 2019. 7. The Occupy your wrist! Campaign was launched during the year. Swatch paid $348,000 for advertising in magazines for the period March 1, 2019 to March 1, 2020. The full amount was recorded as advertisine expense 7. The Occupy your wrist! Campaign was launched during the year. Swatch paid $348,000 for advertising in magazines for the period March 1, 2019 to March 1, 2020. The full amount was recorded as advertising expense. 8. Employees earned $22,000 during December have not been paid, are expected to be paid January 5, 2020. 9. Swatch's plan for expansion to increase the number of boutiques in the year by 200 stores, was financed by issuance of 11% par value bonds in the amount of $600,000, maturing on July 31, 2021. Interest was paid on April 1 and October 1. The original amount financed has been correctly recorded. 10. Swatch received $100,000 from a customer midway through the 2019 year and is required to deliver goods to the customer by or on March 31, 2020. The entry for the deposit was recorded as Sales. 11. Swatch plans to produce a film called 'Planet Ocean', aimed at raising awareness of oceanic health. On April 1, 2019, Swatch paid an amount of $50,000 to photographer Yann Bertand for his services for the next year. The transactional entry was recorded as a debit to Land. Required: Complete the following: (Hint: You may want to organize the unadjusted trial balance by element prior to setting up your T-accounts. Also, remember to transfer balances from the unadjusted trial balance to your T-accounts before starting.) 1. Identify and Prepare all required adjusting entries. This includes all adjusting entries as well as any correcting entries. Include all calculations, where applicable. Descriptions of the journal entries are NOT required 2. Post the entries to the appropriate T-accounts. Use a logical system for referencing all journal entries. No date referencing is required assuming a logical system is used. 3. Prepare an Adjusted Trial Balance at December 31, 2019. Be sure to prepare the trial balance in a logical manner by element (Hint: in order of where they are reported on the financial statements, unlike the adjusted trial balance provided, which is in alphabetical order). 4. Prepare the following statements in proper format: Statement of Comprehensive Income (Multi-step Income Statement) Statement of Financial Position (Classified Balance Sheet) Statement of Retained Earnings 5. Prepare the closing journal entry(ies)