Earlier segments of this problem have described how Aster Turane created Aster Systems on October 1, 2017. Aster has continued to operate his company throughout May using a perpetual inventory system and moving weighted average costing method. Aster went about his business as usual but started calling his customers regularly to remind them to pay their bills. He believes that the longer the receivable, the more unlikely he will not be getting paid. At the end of May, his accountant has advised him that he should change his year end in order to take advantage of a discount by the accounting firm outside of his busy season, which he does to May 30. His accountant has also advised him to be sure to adjust for bad debts after their conversation about the receivables, Aster has determined the following chart as the bad debts expense: Current 0.75% 1-30 days overdue -2% 31 - 60 days overdue - 5% 61+ days overdue - 10% 4) Prepare the necessary adjusting entries for May 30, 2018. Including the receivables adjustment 5) Prepare an adjusted trial balance. 6) Prepare a Multi-step Income Statement for January 1, 2018 - May 30, 2018 7) Close the temporary accounts and post them to the ledger. 8) Prepare a Classified Balance Sheet as of May 30, 2018. The account 108 has been created for allowance of doubtful accounts. The account 695 has been created for bad debt expense. 3 8 May Aster Turane injected $4.000 cash into the business. Deposit 5. 2 Wrote a cheque to Ledcor for balance of S14,000. Cheque 9. Sold 175 units of merchandise with a retail value of $11,000 to Kinsetta Groceries with terms of 1/10,n/30, FOB shipping point. Purchased 150 pieces of inventory from Ledcor for $6,000 with terms of 1/10,n30, FOB 4 shipping point. 6 Paid D. Gee for 4 days work at $345 per day. Cheque 10. Kinsetta paid their balance. Deposit 6 Took advantage of a cash sale on merchandise. Purchased 240 units @ $22.00 each. Cheque 10 11. 12 Donated another $120 to the local animal rescue charity. Cheque 12. 13 Paid Ledcor their balance. Cheque 13. 18 Paid for a computer meltdown and repaired entire office for $3,800. Cheque 14. 22 Withdrew $2,200 cash. Cheque 15. 23 Allready Goods put a deposit down of $3,000 for a job to be completed. Deposit 7. 28 Sold 220 units to Allready Goods for $8,400 cash. Deposit 8 ADJUSTING ENTRIES 31 The inventory of computer supplies was at S780 according to a count. 31 A count of merchandise inventory showed 260 units 31 Two months of the prepaid insurance has passed. 4 remain. 31 Two months of the prepaid rent has passed. I remain. Two months have passed for computer equipment depreciation which has a 5-year life with 31 no residual value Two months have passed for office equipment depreciation which has a 10-year life with no 31 residual value. 31 Donald Gee is owed 7 days work. 31 As of December 31, half of the work for Allready goods has been complete 31 Bad Debt Expense Adjustment MAY 2018 BANK STATEMENT Date Cheque/Deposit # Amount Balance 05/01 Open 14,043 05/01 Deposit 4 4,720 18.763 05/02 Cheque 4 -120 18,643 05/03 Deposit 5 4,000 22,643 05/04 Cheque 9 -14,000 8,643 05/07 Cheque 10 -1,380 7.263 05/09 Deposit 6 10,890 18,153 05/17 Cheque 13 -5,940 12,213 05/17 Cheque 6 -1,380 10,833 05/17 Cheque 11 -5,280 5,553 05/23 Cheque 15 -2.200 3,353 05/25 Deposit 7 3,000 6,353 05/31 Interest Income 12 6.365 05/31 Bank Charges -35 6,330