CM Corporation (CMC) was founded in 2000 by Eric Conner and Phil Martin The company designs, installs, and services security systems for high tech companies The founders, who describe themselves as entrepreneurial geeks, met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries In October 2019, CMC hired you as an accounting intern Lately Conner and Martin have been working with radio frequency identification (RFID) technology They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products This technology has numerous inventory applications in multiple industries One of the most basic applications is tracking manufacturing components if tagged components go walking (if employees attempt to take them), companies can easily track and find them Conner and Martin have sold their system to several high tech companies in the area These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and others To date, CMCs cash flow from sales and services has adequately funded its operations CMC anticipates growth potential for its products As a result, it is planning to go to the market with a new common stock issue at the end of 2021 Many of the issues you will address in this continuing problem involve choices that are affected by preparing for this anticipated stock issue To familiarize you with the company's operations, Conner and Martin have provided an unadjusted trial balance from the end of last year (2019) on an Excel spreadsheet Required (a) Download the file named CMC2019 xls, which has the unadjusted trial balance This file also contains an accounting system comprised of a series of linked spreadsheets The linkages should enable the effects of all accounting entries (journal, adjusting, and closing) to flow through to spreadsheets for the income statement, balance sheet, and statement of cash flows Check the links to make sure they are all right Fix any missing or erroneous links and describe your repair work in sheet Note (You will find a few in stmtcashflows ) (b) You notice that for the fiscal year ended December 31, 2019, someone has made all the journal entries but none of the adjusting or closing entries Conner asks you to prepare the necessary adjustments by (1) listing each AJE in sheet AJEs and Closing Entries and (2) entering the adjustments in columns E and G of sheet trialBal2019 (Do not forget to enter JE for easy reference CMC uses a perpetual inventory system ) The following information is provided for adjustments prior to closing the books Wages earned by employees during December and to be paid in January are $33,875 associated payroll taxes on these wages are $2,710 On July 1, a client paid CMC $205,720 in advance for a year of consulting services 2 You discover that a product sale was made and recorded in December for $128,600 the product had not yet been shipped The cost of the product was $68,742 Bad debt expense has been calculated to be $17,508 but has not yet been recorded The Prepaid Expense account has a balance of $22,774 This balance includes $11,200 for a two year insurance policy purchased on January 1, 2019 Depreciation expense for the year is $82,620 Interest expense accrued on its long term liabilities is $7,765 On December 15, CMC declared a dividend of $110,000, to be paid on January 15, 2020 Income tax expense is $201,109 (c) Close the temporary accounts by (1) listing the closing entries in the sheet named AJEs and Closing Entries and (2) entering the closing amounts in columns K M of trialBal2019 (d) Create post closing trial balance in columns N and P of trialbal2019 Check the numbers in post closing trial balance and those on balancesheet to make sure the balance sheet is correct (e) Write a brief memo to the CMC management, summarizing the work you have done and any issues you have noticed The memo should be double spaced and no more than two pages long Use your own words because plagiarism is unacceptable and will result in a score of 0 mncome Statement Accounts Gross product sales revenue 9 293 346 Service revenue 1 158 785 Product sales rebus 162 400 Product sales discounts Product cost of goods sold 5 384 590 Service cost of goods sold 570 811 advertising 163 870 ad debt expense Depreciation and amortization 54 500 64 500 Dues and subscriptions Equipment expense 150 781 150 781 Santoss on disposal come tax expense surance merest expense Westment income Legal and accounting fees 106 650 106 650 discellaneous 9 048 9 048 ce expense 220 114 Payroll taxes 136,975 Property taxes 104 570 Repair and maintenance 42028 Research and development 470 680 elephone 20085 Travel and entertainment 47049 964 670 Vagos mcers 710 000 710 000 let income) Loss General Ledger Account Name Balance Sheet Accounts Cash and cash equivalents Unad Balance 12 3119 Credit Dobit 12 31 19 Adjusting JES Debit JEN Credit Adjusted Balance 12 3119 Debit Credit 72 337 12 3119 Closing JES Dobit JE Credit Post Closing TAB 12 31 19 Debit Credit 72 337 Accounts Receivable 910 680 0 00 4 $ 17,508 00 893 172 Allowance for doubtful accounts Inventory 1 272 160 1 340 902 Prepaid expenses 22 774 17 174 Other Current Assets 16 063 16 063 Building 874 418 874,418 336 983 Equipment and fumiture 336 983 Land 348,791 348 791 Accum Depr investments 140,185 Godwill 397 740 Other intangible assets 253 900 Accounts Payable 1 169 343 1 169 343 Dividends payable 110,000 110 000 Interest payable 12 865 Uneamed revenue 102 860 128 600 33 875 Wages payable 115 225 Payroll taxes payable 2 710 11 560 Income tax payable 201,109 201,109 Long term liabilities Common Stock 920 000 Paldin capital common stock Treasury Stock Retained Eamings Dividends 110 000 8 Net Income (Loss) 5 201,666 5 427 231 mncome Statement Accounts Gross product sales revenue 9 293 346 Service revenue 1 158 785 Product sales rebus 162 400 Product sales discounts Product cost of goods sold 5 384 590 Service cost of goods sold 570 811 advertising 163 870 ad debt expense Depreciation and amortization 54 500 64 500 Dues and subscriptions Equipment expense 150 781 150 781 Santoss on disposal come tax expense surance merest expense Westment income Legal and accounting fees 106 650 106 650 discellaneous 9 048 9 048 ce expense 220 114 Payroll taxes 136,975 Property taxes 104 570 Repair and maintenance 42028 Research and development 470 680 elephone 20085 Travel and entertainment 47049 964 670 Vagos mcers 710 000 710 000 let income) Loss General Ledger Account Name Balance Sheet Accounts Cash and cash equivalents Unad Balance 12 3119 Credit Dobit 12 31 19 Adjusting JES Debit JEN Credit Adjusted Balance 12 3119 Debit Credit 72 337 12 3119 Closing JES Dobit JE Credit Post Closing TAB 12 31 19 Debit Credit 72 337 Accounts Receivable 910 680 0 00 4 $ 17,508 00 893 172 Allowance for doubtful accounts Inventory 1 272 160 1 340 902 Prepaid expenses 22 774 17 174 Other Current Assets 16 063 16 063 Building 874 418 874,418 336 983 Equipment and fumiture 336 983 Land 348,791 348 791 Accum Depr investments 140,185 Godwill 397 740 Other intangible assets 253 900 Accounts Payable 1 169 343 1 169 343 Dividends payable 110,000 110 000 Interest payable 12 865 Uneamed revenue 102 860 128 600 33 875 Wages payable 115 225 Payroll taxes payable 2 710 11 560 Income tax payable 201,109 201,109 Long term liabilities Common Stock 920 000 Paldin capital common stock Treasury Stock Retained Eamings Dividends 110 000 8 Net Income (Loss) 5 201,666 5 427 231

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CM Corporation (CMC) was founded in 2000 by Eric Conner and Phil Martin. The company designs, installs, and services security systems for high-tech companies. The

CM Corporation (CMC) was founded in 2000 by Eric Conner and Phil Martin. The company designs, installs, and services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. In October 2019, CMC hired you as an accounting intern.

Lately Conner and Martin have been working with radio frequency identification (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory applications in multiple industries. One of the most basic applications is tracking manufacturing components; if tagged components "go walking" (if employees attempt to take them), companies can easily track and find them. Conner and Martin have sold their system to several high-tech companies in the area. These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and others. To date, CMCs cash flow from sales and services has adequately funded its operations.

CMC anticipates growth potential for its products. As a result, it is planning to go to the market with a new common stock issue at the end of 2021. Many of the issues you will address in this continuing problem involve choices that are affected by preparing for this anticipated stock issue.

To familiarize you with the company's operations, Conner and Martin have provided an unadjusted trial balance from the end of last year (2019) on an Excel spreadsheet.

Required:

(a) Download the file named CMC2019.xls, which has the unadjusted trial balance. This file also contains an accounting system comprised of a series of linked spreadsheets. The linkages should enable the effects of all accounting entries (journal, adjusting, and closing) to flow through to spreadsheets for the income statement, balance sheet, and statement of cash flows. Check the links to make sure they are all right. Fix any missing or erroneous links and describe your repair work in sheet Note. (You will find a few in stmtcashflows.)

(b) You notice that for the fiscal year ended December 31, 2019, someone has made all the journal entries but none of the adjusting or closing entries. Conner asks you to prepare the necessary adjustments by (1) listing each AJE in sheet AJEs and Closing Entries and (2) entering the adjustments in columns E and G of sheet trialBal2019. (Do not forget to enter JE# for easy reference. CMC uses a perpetual inventory system.)

The following information is provided for adjustments prior to closing the books.

Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710.
On July 1, a client paid CMC $205,720 in advance for a year of consulting services.

You discover that a product sale was made and recorded in December for $128,600; the product had not yet been shipped. The cost of the product was $68,742.
Bad debt expense has been calculated to be $17,508 but has not yet been recorded.
The Prepaid Expense account has a balance of $22,774. This balance includes $11,200 for a two-year insurance policy purchased on January 1, 2019.
Depreciation expense for the year is $82,620.
Interest expense accrued on its long-term liabilities is $7,765.
On December 15, CMC declared a dividend of $110,000, to be paid on January 15, 2020.
Income tax expense is $201,109.

(c) Close the temporary accounts by (1) listing the closing entries in the sheet named AJEs and Closing Entries and (2) entering the closing amounts in columns K-M of trialBal2019.

(d) Create post-closing trial balance in columns N and P of trialbal2019. Check the numbers in post-closing trial balance and those on balancesheet to make sure the balance sheet is correct.
(e) Write a brief memo to the CMC management, summarizing the work you have done and any issues you have noticed. The memo should be double-spaced and no more than two pages long. Use your own words because plagiarism is unacceptable and will result in a score of 0!

mncome Statement Accounts Gross product sales revenue 9.293 346 Service revenue 1.158.785 Product sales rebus 162 400 Product sales discounts Product cost of goods sold 5.384.590 Service cost of goods sold 570 811 advertising 163 870 ad debt expense Depreciation and amortization 54 500 64.500 Dues and subscriptions Equipment expense 150 781 150.781 Santoss on disposal come tax expense surance merest expense Westment income Legal and accounting fees 106.650 106 650 discellaneous 9.048 9.048 ce expense 220.114 Payroll taxes 136,975 Property taxes 104.570 Repair and maintenance 42028 Research and development 470.680 elephone 20085 Travel and entertainment 47049 964.670 Vagos .mcers 710.000 710.000 let income) Loss General Ledger Account Name Balance Sheet Accounts Cash and cash equivalents Unad. Balance 12/3119 Credit Dobit 12/31/19 Adjusting JES Debit JEN Credit Adjusted Balance 12/3119 Debit Credit 72 337 12/3119 Closing JES Dobit JE# Credit Post-Closing TAB 12/31/19 Debit Credit 72 337 Accounts Receivable 910.680 0.00 4 $ 17,508.00 893.172 Allowance for doubtful accounts Inventory 1.272.160 1 340.902 Prepaid expenses 22.774 17.174 Other Current Assets 16.063 16.063 Building 874 418 874,418 336.983 Equipment and fumiture 336.983 Land 348,791 348 791 Accum Depr investments 140,185 Godwill 397 740 Other intangible assets 253.900 Accounts Payable 1.169.343 1.169.343 Dividends payable 110,000 110.000 Interest payable 12.865 Uneamed revenue 102.860 128.600 33.875 Wages payable 115.225 Payroll taxes payable 2.710 11.560 Income tax payable 201,109 201,109 Long term liabilities Common Stock 920.000 Paldin capital common stock Treasury Stock Retained Eamings Dividends 110.000 8 Net Income (Loss) 5.201,666 5.427 231 mncome Statement Accounts Gross product sales revenue 9.293 346 Service revenue 1.158.785 Product sales rebus 162 400 Product sales discounts Product cost of goods sold 5.384.590 Service cost of goods sold 570 811 advertising 163 870 ad debt expense Depreciation and amortization 54 500 64.500 Dues and subscriptions Equipment expense 150 781 150.781 Santoss on disposal come tax expense surance merest expense Westment income Legal and accounting fees 106.650 106 650 discellaneous 9.048 9.048 ce expense 220.114 Payroll taxes 136,975 Property taxes 104.570 Repair and maintenance 42028 Research and development 470.680 elephone 20085 Travel and entertainment 47049 964.670 Vagos .mcers 710.000 710.000 let income) Loss General Ledger Account Name Balance Sheet Accounts Cash and cash equivalents Unad. Balance 12/3119 Credit Dobit 12/31/19 Adjusting JES Debit JEN Credit Adjusted Balance 12/3119 Debit Credit 72 337 12/3119 Closing JES Dobit JE# Credit Post-Closing TAB 12/31/19 Debit Credit 72 337 Accounts Receivable 910.680 0.00 4 $ 17,508.00 893.172 Allowance for doubtful accounts Inventory 1.272.160 1 340.902 Prepaid expenses 22.774 17.174 Other Current Assets 16.063 16.063 Building 874 418 874,418 336.983 Equipment and fumiture 336.983 Land 348,791 348 791 Accum Depr investments 140,185 Godwill 397 740 Other intangible assets 253.900 Accounts Payable 1.169.343 1.169.343 Dividends payable 110,000 110.000 Interest payable 12.865 Uneamed revenue 102.860 128.600 33.875 Wages payable 115.225 Payroll taxes payable 2.710 11.560 Income tax payable 201,109 201,109 Long term liabilities Common Stock 920.000 Paldin capital common stock Treasury Stock Retained Eamings Dividends 110.000 8 Net Income (Loss) 5.201,666 5.427 231