Comprehensive Case: Chapters 3-9 Clear Images Ltd, has been in operation for several years. It purchases, customizes, and sells studio sets for its clients. The Record and post company's post-closing trial balance at July 31, 2015, the end of its fiscal year, is presented below: CLEAR IMAGES LTD. Post-Closing Trial Balance July 31, 2015 Credit transaction and adj ing journal entries, prepare adjusted tri balance and financi statements. (SO 2,3,4,5) Cash Accounts receivable. Allowance for doubtful accounts Merchandise inventory Equipment Accumulated depreciation-equipment Accounts payable Bank loan payable Common shares. Retained earnings Debit $ 170,000 2,700,000 $ 300,000 500,000 194,000 $3,564,000 73,669 1,009,000 350,000 300,000 1,531,331 $3,564,000 company and The company had a limited amount of business activity in August 2015 because of holidays for both the its major customers. You have been hired on a temporary basis to update the company's records for August. The August transactions and adjustments are presented below: Instructions Aug. 1 Paid $20,000 for office expenses and $3,600 for the August rent. 2 Accepted a six-month, 8% note in exchange for Chen Enterprises' overdue account receivable of $100,000. 3 Sale on account to Chavier Ltd. for $500,000, terms 2/10, n/30. Cost of goods sold, $270,000. The company uses a perpetual inventory system. 8 Determined that an account receivable from Densmore Ltd. of $70,000 is uncollectible. 9 A $300,000 partial payment on account was received from Chavier (see August 3 transaction). 10 Old equipment was sold for $6,000. The equipment's original cost was $44,000; accumulated depre- ciation to the date of disposal was $36,169. 14 Paid a $10,000 income tax instalment. 21 Purchased a patent for $24,000 cash. The estimated useful life of the patent is five years; the legal life, 20 years. 31 Recorded bank credit card sales from sales of digital library images for the month, $75,000. The cost of goods sold is $35,000. 31 The monthly bank statement revealed the following unrecorded items: interest on bank loan, $1,500, and bank service charges, $1,130 which included credit card and other bank fees. 31 Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubt- ful accounts totalled $320,000 at month end. 31 Recorded depreciation for the month on the remaining equipment that cost $150,000 and is still in use. Useful life of all equipment is estimated to be four years with no residual value. The straight- line method of depreciation is used and depreciation is calculated to the nearest month. 31 Recorded and paid salaries for the month of $100,000. 31 Accrued interest on the Chen Enterprises' note receivable (see August 2 transaction). Recorded amortization on the patent (see August 21 transaction). A full month's amortization is recorded on any intangible assets acquired during the month. 31 (a) Prepare T accounts and enter the July 31 balances. (b) Record the August transactions and adjustments. When can b The (c) Post the journal entries from part (b) to the T accounts. ve T cho c (d) Prepare an adjusted trial balance at August 31. 31A v 31/8 lun (e) Prepare an (1) income statement, (2) statement of changes in equity, and (3) statement of financial position at August 31.