Cassano Family Company's trial balance on November 30, 2020, is presented below. Flash Company uses a perpetual inventory system (With FIFO cost flow method). Cassano Family Trial Balance November 30, 2020 Accounts Debit Credit Cash 400,000 Accounts Receivable 330,000 Allowance for Doubtful Accounts 30,000 Prepaid Insurance 30,000 Inventory 335,000 Building 500,000 Accumulated Depreciation - Building 90,000 Equipment 256,000 Accumulated Depreciation - Equipment 46,500 Land 500,000 Goodwill 50,000 Patents 80,000 Accumulated Amortization - Patents 4,000 Accounts Payable 377,000 Interest Payable Notes Payable Unearned Revenue 30,000 Share Capital ($10 par) 1,000,000 Retained Earnings 425,730 Dividends Sales 1,433,720 Sales Returns & Allowances 25,000 Sales Discount 20,000 Gain on Disposal of Land Amortization Expense 400 Bad Debt Expense Costs of goods sold 625,000 Depreciation Expense - Building 20,000 Depreciation Expense - Equipment 16,500 Interest Expense 10,000 Insurance Expense 8,650 Entertainment Expense Postage Expense Miscellaneous Expense - Gain/Loss on Disposal of Equipment Rent Expense Utility Expense Salaries & Wages Expense Total 90,400 20,000 120,000 3,436,950 $ 3,436,950 In December, Cassano Family incurred transactions, as follows: Date 1-Dec 1-Dec 1-Dec Transaction Purchased building for $240,000 with estimated useful life of 40 years and no scrap value. Cassano Company applies the straight-line depreciation method for all fixed assets. Paid rent expense of $20,000 for December. Took out bank note for $500,000 with an interest rate of 12% ($10,000 of the note payable become due in 2021). Purchased 1,000 units of inventory for $500,000 terms 5/10 net 30 and import directly to the warehouse Sold land with cost of $47,500 for $65,000. Sold equipment with an original cost of $60,000 for $22,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. 3-Dec 5-Dec 8-Dec 10-Dec Paid for inventory purchased December 3. 11-Dec Sold 770 units of inventory on account for $924,000. 12-Dec Paid postage $500, Miscellaneous $800, Entertainment $370 in cash. 18-Dec Wrote off uncollectible account $20,000. 20-Dec Received payment with 2% cash discount for sale on December 10. Declared and paid dividends of 20% of the par value of the share. 31-Dec of share. 31-Dec Paid wages and salaries of $35,000. Additional information: 1. A record stated that beginning inventory on December 1 should be 670 units. 2. Interest expense on the bank note on December 1 has not yet been accrued. 3. Depreciation expense for the month: $4,500 for building, except for the new building purchased on December 1 $3,500 for equipment. 4. Prepaid insurance of $1,350 expired in December. 5. Unearned revenue of $25,000 was earned during the month. 6. Amortization expense for the month $1,000. 7. Recorded bad debts expense based on the aging of accounts receivable, as follows: Age of accounts Balance, December 31 Estimated Percentage Uncollectible 1-30 days 31-60 days 61-90 days Over 90 days 180,000 125,500 17,600 76,900 $400,000 2% 5% 20% 50% Requirements: 1. Journalize and post normal monthly transactions to general ledger accounts in T accounts. 2. Prepare a trial balance as at December 31, 2020. (Hint: Assets first in order of liquidity). 3. Journalize and post adjusting entries in the same T accounts as requirement #1 above. 4. Prepare an adjusted trial balance as at December, 2020. 5. Generate income statement, statement of owner's equity, and classified balance sheet for the year ended December 31, 2020. (Note: November 30, 2020 Trial Balance represents the accumulated revenue and expenses of the first 11 months in 2020. Tax rate: 0% - There is no tax expense). 6. Journalize and post-closing entries in the same T accounts in requirement #1 above. 7. Prepare a post-closing trial balance as at December, 2020. Cassano Family Company's trial balance on November 30, 2020, is presented below. Flash Company uses a perpetual inventory system (With FIFO cost flow method). Cassano Family Trial Balance November 30, 2020 Accounts Debit Credit Cash 400,000 Accounts Receivable 330,000 Allowance for Doubtful Accounts 30,000 Prepaid Insurance 30,000 Inventory 335,000 Building 500,000 Accumulated Depreciation - Building 90,000 Equipment 256,000 Accumulated Depreciation - Equipment 46,500 Land 500,000 Goodwill 50,000 Patents 80,000 Accumulated Amortization - Patents 4,000 Accounts Payable 377,000 Interest Payable Notes Payable Unearned Revenue 30,000 Share Capital ($10 par) 1,000,000 Retained Earnings 425,730 Dividends Sales 1,433,720 Sales Returns & Allowances 25,000 Sales Discount 20,000 Gain on Disposal of Land Amortization Expense 400 Bad Debt Expense Costs of goods sold 625,000 Depreciation Expense - Building 20,000 Depreciation Expense - Equipment 16,500 Interest Expense 10,000 Insurance Expense 8,650 Entertainment Expense Postage Expense Miscellaneous Expense - Gain/Loss on Disposal of Equipment Rent Expense Utility Expense Salaries & Wages Expense Total 90,400 20,000 120,000 3,436,950 $ 3,436,950 In December, Cassano Family incurred transactions, as follows: Date 1-Dec 1-Dec 1-Dec Transaction Purchased building for $240,000 with estimated useful life of 40 years and no scrap value. Cassano Company applies the straight-line depreciation method for all fixed assets. Paid rent expense of $20,000 for December. Took out bank note for $500,000 with an interest rate of 12% ($10,000 of the note payable become due in 2021). Purchased 1,000 units of inventory for $500,000 terms 5/10 net 30 and import directly to the warehouse Sold land with cost of $47,500 for $65,000. Sold equipment with an original cost of $60,000 for $22,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. 3-Dec 5-Dec 8-Dec 10-Dec Paid for inventory purchased December 3. 11-Dec Sold 770 units of inventory on account for $924,000. 12-Dec Paid postage $500, Miscellaneous $800, Entertainment $370 in cash. 18-Dec Wrote off uncollectible account $20,000. 20-Dec Received payment with 2% cash discount for sale on December 10. Declared and paid dividends of 20% of the par value of the share. 31-Dec of share. 31-Dec Paid wages and salaries of $35,000. Additional information: 1. A record stated that beginning inventory on December 1 should be 670 units. 2. Interest expense on the bank note on December 1 has not yet been accrued. 3. Depreciation expense for the month: $4,500 for building, except for the new building purchased on December 1 $3,500 for equipment. 4. Prepaid insurance of $1,350 expired in December. 5. Unearned revenue of $25,000 was earned during the month. 6. Amortization expense for the month $1,000. 7. Recorded bad debts expense based on the aging of accounts receivable, as follows: Age of accounts Balance, December 31 Estimated Percentage Uncollectible 1-30 days 31-60 days 61-90 days Over 90 days 180,000 125,500 17,600 76,900 $400,000 2% 5% 20% 50% Requirements: 1. Journalize and post normal monthly transactions to general ledger accounts in T accounts. 2. Prepare a trial balance as at December 31, 2020. (Hint: Assets first in order of liquidity). 3. Journalize and post adjusting entries in the same T accounts as requirement #1 above. 4. Prepare an adjusted trial balance as at December, 2020. 5. Generate income statement, statement of owner's equity, and classified balance sheet for the year ended December 31, 2020. (Note: November 30, 2020 Trial Balance represents the accumulated revenue and expenses of the first 11 months in 2020. Tax rate: 0% - There is no tax expense). 6. Journalize and post-closing entries in the same T accounts in requirement #1 above. 7. Prepare a post-closing trial balance as at December, 2020