DEF Stores LTD Unadjusted Trial Balance 31 December 2019 Account $ Debit s Credit Cash 55,000 Accounts Receivable 75,000 Allowance for Doubtful Accounts 5,000 Merchandise Inventory 0 Share Investments 100,000 Equipment 60,000 Building 480,000 Land 400,000 Mortgage Payable 200.000 Accounts Payable 110,000 Common Stock 500,000 Retained Earnings (As of 1 Jan. 2019) 170,000 Sales 460,000 Sales Returns and Allowances 25,000 Sales Discounts 5,000 Cost of Goods Sold 120,000 Salary & Wage Expense 60,000 Rent Expense 55,000 $ 1,440,000 $ 1,440,000 Total Transactions 1. DEF Stores LTD purchased merchandise on account from supplier D 540,000, terms 2/10,n/30. $1,000 freight cost is paid by the seller as cash. 2. DEF Stores LTD sold all existing merchandise on account $50,000, terms 1/10,n/30. Pricing policy of the company is cost plus 25% markup. $1,000 freight cost is paid by the seller as cash. 3. Customer (in transaction 2) returned 20% of goods to DEF Stores LTD. Assume that the goods were not defective. 4. Aging schedule for ABC Stores is presented below. Calculate missing values. Number of Days Past Due Customer X Y Z Total Estimated Percentage uncollectible Tota Estimated Bad Debts Not Yet Total Due 1-30 31-60 61-90 Over 90 50,000 10,000 10,000 25,000 5.000 15,000 5,000 5,000 5,000 10.000 10,000 75.000 15,000 15,000 5.000 25,000 15,000 10% 12% 60% 12 12 12 12 2 At Dec 31, 2019, unadjusted balance in Allowance for Doubtful Accounts is a credit of $5,000. 5. The equipment has no salvage value and a useful life of 8 years. The building has a useful life of 10 years with no salvage value. Both the equipment and building were purchased on December 1, 2019. There has been no adjustment to account for depreciation for the current year of 2019. DEF Stores LTD applies declining-balance method for the equipment and straight-line method for the building. 6. DEF Stores LTD issued an $200,000, 4%, 5-year mortgage note on December 31, 2018 with equal annual payments. Journalize the first installment payment occurred on December 31, 2019. 7. DEF stores LTD acquires 40% of the ordinary shares of XYZ plc for $100,000 on January 1, 2019 (reported as Share Investments in unadjusted trial balance). For 2019, XYZ reports net income of $10,000 and paid dividends of $4,000. 8. Rent of $5,000 were unrecorded and unpaid as of 31 December, 2019. 9. Corporate tax rate is 20%. Calculate corporate tax provision expense. Required: a) Open ledger accounts and journalize the transactions. (45%) b) Prepare adjusted trial balance and multiple-step income statement for the period ended December 31, 2019. (15%) c) Prepare a classified statement of financial position as of December 31, 2019. (10%) List of accounts to be used Cash, Accounts Receivable, Allowance for Doubtful Accounts, Merchandise Inventory, Share Investments, Equipment, Acc. Depr. - Equipment Building, Acc. Depr. - Building, Land, Mortgage Payable, Accounts Payable, Accrued Expense, Corp. Tax Payable, Common Stock, Retained Earnings, Sales, Revenue from Share Investments, Sales Returns and Allowances, Sales Discounts, Cost of Goods Sold, Salary & Wage Expense, Rent Expense, Freight Expense, Bad Debt Expense, Depr. Expense, Interest Expense, Tax Expense