CAPTAIN JET INC. BALANCE SHEET DECEMBER 31, 2017 Current Assets Cash Notes Receivable Accounts Receivable Inventories Prepaid Insurance Prepaid Rent 41,200 16,000 38,800 40,000 540 500 137,040 Total Current Assets Non-Current Assets Long-term Investments Investments in held-for-maturity securities Land held for future development 51,000 45,500 Property, Plant, and Equipment Land Buildings Less: Accumulated Depreciation 85,000 291,000 (187,500) Intangible Assets Capitalized Development Costs Goodwill Other Identifiable Intangible Assets 8,000 76,000 48,000 417,000 554,040 Total Non-Current Assets Total Assets Current Liabilities Notes Payable Accounts Payable Unearned Revenues Income Taxes Payable Property Taxes Payable Interest Payable 110,000 33,500 12,000 8,440 6,600 1,500 172,040 Total Current Liabilities Non-Current Liabilities Provisions Related to Pensions Bonds Payable 0 0 0 172,040 Total Non-Current Liabilities Total Liabilities Stockholders' Equity Common Stock Preferred Stock Paid-i Paid-in-capital - Preferred Stock Retained Earnings Accumulated Other Comprehensive Income Less: Treasury Stock 100,000 100,000 27,500 10,000 152,250 5,000 (12,750) 382,000 554,040 in-capital - Common Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity The 2017 balance sheet of the Captain Jet Inc. is attached. During 2018, the following events occurred 1. On January 10, sell merchandise on account to Rayms $9,600 and Fischer $8,800. 2. On January 12, purchase merchandise on account from Zapfel $3,000 and Liotta $2,400. 3. On January 13, Receive checks, $4,000 from Longhini and $2,000 from Hall, for sales on account. 4. On January 15, send checks to Joosten for 9,000 and to Maida for $11,000 for merchandise purchased last year 5. On January 16, issue credit of $400 to Fieber for merchandise returned. Hint: you need to create a "sales returns" account, which is a contra account for "sales revenue" on the income statement, meanwhile reduce accounts receivable 6. On January 21, pay off the balances to Zapfel and Liotta for the purchases on January 12 7. Summary monthly cash sales (for January) total $15,500. 8. On Feburary 9, receive payment in full from Rayms and Fischer 9. On March 1, pay rent of $6,000 for a two-year term, effective on the day of purchase 10. On April 1, sell merchandise on account to Dunlap $1,600 11. On May 1, pay $400 cash for office supplies. All supplies are expensed right away 12. Cash dividends totaling $800 are declared and paid on June 13. 13, on July 1, Issue a note of $120,000 to bank (one year, annual interest rate 3%) for cash 14. On July 5, purchase merchandise from Maida for $33,000 on account 15. On July 7, issue common stock 1000 shares, $10 par, in exchange of a land with a fair market value of $15,000. 16. On July 8, return $200 of merchandise to Maida and receive credit. Hint: This is a purchase return, as well as reduces accounts payable 17. On August 1, sell merchandise to Lachey on account for $80,000. 18. On August 5, Pay off the balance to Maida 19. On August 10, receive half of the payment from Lachey. 20. On August 14, expect $1,300 bad debt from Tooket and directly write it off from accounts receivable. (Hint: you need to record "bad debt expense" and reduce accounts receivable) 21. On August 30, Pay utitlities expense, $10,902. 22. On August 31, Lachey pays off its balance 23. Over the year, sales and office employees earned $45,500 in salaries and wages, of which $1,500 was still payable at the end of year. 24. On October 1, pay off notes payable $110,000 and associated accrued interest $6,000, of which $1,500 was shown on the balance sheet 25. On December 31, An unpaid utilities bill (December, $1,250) is due on January 10 next year Additional Information at the end of the year: 1. Depreciation expense for the year was $14,250. 2. The company estimated that it has to pay federal income tax, $250. 3. After physically counting, the company decided that the ending inventories worth $40,146 4. The company adopts the periodic inventory system Instructions: 1. Prepare journal entries for each event (in sheet "JE") 2. Prepare adjusting entries (in sheet "JE"). 3. Prepare adjusted trial balance (in sheet "adj.TB" 4. Prepare Income Statement, Retained Earnings Statement and Balance Sheet (in sheet "FSs"). 5. Prepare closing entries (in sheet "Closing"). Journal Entries Transaction #1 Adjusting Journal Entries Adjusting JE. 1 Interest expense 1-Jan Dr: Accounts Receivable 18400 1800 Sales revenue 18400 Interest payable 1800 Transaction #2 Adjusting JE. 2 Add JEs below Add adjusting JEs below Capital Jet Inc. Adjusted Trial Balance, 12/31/2018 Debit Credit Cash Notes Receivable Accounts Receivable Inventories Prepaid Insurance Prepaid Rent Investments in held-for-maturity securities Land held for future development an Buildings Accumulated Depreciation Capitalized Development Costs Goodwil Other Identifiable Intangible Assets Notes Payable Accounts Payable salaries payable Interest payable Unearned Revenues Income Taxes Payable Property Taxes Payable Utilities payable Common Stock Preferred Stock Paid-in-capital Common Stoclk Paid-in-capital - Preferred Stock Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Sales revenue Sales returns supplies expense bad debt expense utilities expense salaries expense interest expense depreciation expense Rent expense Income tax expense COGS dividends Total 0 0 CAPTAIN JET INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2018 Sales Revenue Less: Sales Return Net Sales Cost of Goods Sold Gross Profit Utilities Expenses Salary and Wages Expenses Rent Expenses Depreciation Expenses Interest Expenses Supplies Expenses Bad Debt Expenses Total Expenses Earnings before Income Taxes Earnings after Income Taxes CAPTAIN JET INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2018 Retained Earnings, Beginning of the year Net Income/Loss Dividends Payment Retained Earnings, End of the year CAPTAIN JET INC. BALANCE SHEET AS OF DECEMBER 31, 2018 Current Assets as Notes Receivable Accounts Receivable Inventories Prepaid Insurance Prepaid Rent Total Current Assets Non-Current Assets Long-term Investments Investments in held-for-maturity securities Land held for future development Property, Plant, and Equipment Land Buildings Less: Accumulated Depreciation Intangible Assets Capitalized Development Costs Goodwill Other Identifiable Intangible Assets Total Non-Current Assets Total Assets Current Liabilities Accounts payable Salary and Wages Payable Interest Pavable Unearned Revenue Income Tax pavable Property taxes payable Utilities payable Total Current Liabilities Non-Current Liabilities Notes payable Provisions Related to Pensions Bonds Payable Total Non-Current Liabilities Total Liabilities Stockholders' Equity Common Stock Preferred Stock Paid-in-capital - Common Stock Paid-in-capital Preferred Stock Retained Earnings Accumulated Other Comprehensive Income Less: Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity Add closing JEs below 4