COMPREHENSIVE PROBLEM (Completing the Accounting Cycle Chapters 1-3)

Walley World is a theme park in Valencia, California that began its operations on November 1, 2023, with their Grand Opening occurring on December 1, 2023. Walley World claims to boast the most daring roller coasters in the United States, with the Cookie Tosser Coaster featuring a 460 ft. drop and speeds reaching as much as 135 mph. People come from all over the world to enjoy the Cookie Tosser, as well as their other famous rides, such as the Brain Scrambler, the Knee Knocker, and the OMG.

The following transactions occurred during Walley Worlds first year of operations:

Nov 1 Issued $2,200,000 of common stock for cash.

Nov 3 Paid $20,000 to the property manager, Jim Halpert, for November Rent.

Nov 5 Purchased $900,000 of roller coaster equipment by signing a note, agreeing to repay principal and interest in 5 years. The equipment was purchased from Christopher Farleigh, who lives in a van down by the river.

Nov 10 Paid $60,000 in advance for a one-year general liability insurance policy from Ned Ryerson Insurance Group.

Nov 18 Hired 2 theme park managers, Clark Griswold and Van Wilder, who will start working on December 1. Surprisingly, both managers passed their drug tests and background checks.

Nov 20 Purchased $75,000 of supplies from Dunder Mifflin Office Supply Store on account.

Nov 22 Sold $700,000 of single-use pre-sale tickets for cash (to be used within one year of the theme parks grand opening).

Nov 27 Paid $12,000 to Frankenstein Electric Company for November utilities.

Nov 30 Sold $1,000,000 in annual season tickets for cash (valid for unlimited access to the theme park).

Dec 1 Prepaid $300,000 for billboard advertisements for 18 months.

Dec 18 Paid employee salaries totaling $48,000 for the current month.

Dec 27 Received a bill for $15,000 from Frankenstein Electric Company for December utilities, which will be paid on the due date, January 10, 2024.

Dec 29 Paid $40,000 to the property manager, Jim Halpert, for December 2023 and January 2024 Rent.

Dec 31 Received $50,000 for on-site theme park admission sales in December.

Dec 31 Paid cash dividends of $2,500 to stockholders.

Requirements:

1. Record all necessary journal entries for the 2023 transactions. Note: Not all transactions in December require a journal entry. If no entry is required, you may choose to simply omit the transaction, or you may choose to record the date of the transaction and write NO ENTRY in the space where the accounts & amounts would normally be written.
2. Post the journal entries to the T-Accounts.
3. Prepare an Unadjusted Trial Balance as of December 31, 2023.
4. Record the adjusting entries as of December 31, 2023. Additional information necessary for adjusting entries is below:
   1. The Note Payable on December 1 has an interest rate of 10%. Interest and principle are due in 5 years. (Note: assume a full month of interest for November, even though the loan originated on November 5^th as opposed to November 1^st)
   2. The prepaid insurance policy began on December 1, 2023.
   3. Supplies on hand on December 31 were $45,000.
   4. Of the single-use pre-sale tickets sold on November 22, $120,000 have been redeemed by customers for theme park admissions in December.
   5. The season tickets sold on November 30, 2023 are for theme park admissions from December 1, 2023 through December 31, 2024. (Note: Round your calculations to the nearest whole dollar.)
   6. The 18 months of billboard advertisements began on December 1, 2023 and will end on May 31, 2025. (Note: Round your calculations to the nearest whole dollar.)
   7. Accrued salaries of $48,000 for the last two weeks in December will be paid in January.
5. Post the adjusting entries to the T-Accounts. Note: You will be adding to the T-accounts you created in Step 2.
6. Prepare an Adjusted Trial Balance as of December 31, 2023.
7. Prepare the income statement and statement of stockholders equity for the year ended December 31, 2023. Prepare the classified balance sheet as of December 31, 2023.
8. Record the closing entries as of December 31, 2023.
9. Post the closing entries to the T-Accounts. Note: You will be adding to the T-accounts you created in Step 2 and updated in Step 5.
10. Prepare a Post-Closing Trial Balance as of December 31, 2023.