Bill Corporation prepares annual financial statements. The balance sheet at December 31, 2019, is presented below

Bill Corporation Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity

Cash 8,550 Accounts payable 56,935 Accounts receivable 6,000 Common stock ($1 par) 10,000 Allowance for doubtful accounts (750) Paid-in capital in excess of par Common stock 140,000 Inventory 84,000 Retained earnings 34,165 Prepaid insurance 3,300 Equipment 350,000 A/D Equipment (210,000) 241,100 241,100

During 2020 the following transactions occurred: 1. On January 8th, borrowed $10,000 in cash from Sall Corp. in exchange for a note payable. The note has a maturity of January 8th, 2020. Interest of 8% is due at maturity. 2. On January 14th, purchased $9,500 inventory on account. Bill Corp. uses a perpetual inventory system. 3. During January, Bill made sales of $80,000, plus 5.6% sales tax, to customers on account. Cost of goods sold was $48,000. The company uses a perpetual inventory system. Book all the sales in one entry on January 31st. 4. On February 2nd, Bill issued 2,000 shares of common stock for $18 per share. 5. On February 28th, Bill issued 10-year, $75,000 face value, 4% bonds at 96. The bonds pay interest every September 1st and March 1st. 6. During February, Bill made sales of $20,000, plus 5.6% sales tax, to customers on account. Cost of goods sold was $14,000. Book all sales in one entry on February 28th. 7. On March 1st Bill purchased a truck for $18,000. Bill paid $3,000 in cash and took out a Note Payable for the remaining amount. The note has a maturity of March 1st, 2024 and has interest of 7% due at maturity. Use the equipment account for the truck. Cash 8,550 Accounts payable 56,935 Accounts receivable 6,000 Common stock ($1 par) 10,000 Allowance for doubtful accounts (750) Paid-in capital in excess of par Common stock 140,000 Inventory 84,000 Retained earnings 34,165 Prepaid insurance 3,300 Equipment 350,000 A/D Equipment (210,000) 241,100 241,100 Bill Corporation Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity

2 8. On March 2nd Bill sold an old piece of equipment for $4,000 cash. The equipment had an original cost of $180,000 and as of December 31st accumulated depreciation was $170,000. This equipment had a 10-year useful life and no salvage value. This transaction is exempt from sales tax. 9. On March 2nd Bill paid $57,250 of its accounts payable. 10. On March 3rd Bill paid general expenses of $15,500. Assume these were paid as incurred (debit expenses). 11. On March 5th Bill received $90,000 in cash from customers. Bill had not written off the receivables for any of these customers. 12. On March 14th Bill issued 1,000 shares of $100 par, 7% cumulative preferred stock for $262,000 cash. 13. On March 25th Bill paid the sales tax collected from customers to the State of Wisconsin. 14. On March 26th Bill purchased 400 shares of Bill Corporation common stock from a disgruntled shareholder for $39 per share. 15. On March 28th Bill declared a dividend on all outstanding shares on record as of March 28th, totaling $1,000. 16. During March, Bill made sales of $60,000, plus 5.6% sales tax, to customers on account. Cost of goods sold was $30,000. Book all sales in one entry on March 31st. 17. On March 29th Bill recorded salaries and payroll taxes. Employees gross salaries were $30,000. FICA tax was withheld at a rate of 7.65%. Federal income taxes of $4,000 were withheld, and state income taxes of $1,500 were withheld. The federal unemployment tax rate was 1%, and the state unemployment tax rate was 3.25%. No cash has been paid yet, so record all the amounts due in the appropriate payable accounts. Adjusting Journal Entries: 18. Straight-line depreciation with a 10-year useful life and no salvage value is used for equipment purchased in previous years. The equipment (truck) purchased on March 1st (#7) is depreciated using double-declining balance with a useful life of 25 years and a $30,000 salvage value. (Hint: The equipment was purchased at the beginning of March and has one month of depreciation) 19. Accrue interest payable for both notes and also accrue bond interest payable and amortize bond discount/premium. Bill Corp. uses straight line amortization. (Hint: The notes and bond were issued part through the year) 20. The prepaid insurance relates to a policy purchased on December 31, 2017. This insurance expires at a rate of $275 per month. Record as a general expense. 21. Bill estimates that 5.5% of accounts receivable are uncollectible. 22. Bill Corp. is an S-corporation and is not subject to income tax.

3 REQUIRED: Print out the solution pages for the general journal, ledger, and worksheet that follow and enter the following transactions. a. Enter the transactions numbered 1-17 in the general journal provided on the following pages. b. Post the journal entries to the ledger accounts for items 1-17. Look at the cash account for an example of how to use the running balance ledger. I have completed the first two lines of it for you. It is a good idea to keep track of whether your balance column is a debit or a credit, particularly for contra accounts. c. Prepare an unadjusted trial balance at March 31, 2019 and enter on the worksheet. d. Worksheet requirement: Using your unadjusted trial balance (c) above and the data for adjusting entries (#18-22), prepare a 12-column worksheet similar to the worksheet for Sierra Corporation in Chapter 4 and the prior extra credit assignments. You will not receive any credit if the worksheet is incomplete. To save time, you are not required to formally journalize or post your adjusting entries (you can just enter them on the worksheet). You are not required to record closing entries. e. Prepare the multi-step income statement, statement of retained earnings, and classified balance sheet for Bill Corporation as of March 31, 2020 (and for the quarter ended that date). Indicate the shares issued and outstanding for both common stock and preferred stock in your balance sheet.