EASY LTD Unadjusted Trial Balance 30 November 2020 Account Credit 100,000 25,000 50,000 28,800 Debit $ Cash Accounts Receivable 175.000 Allowance for Doubtful Accounts Merchandise Inventory Equipment 80,000 Accumulated Depreciation Equipment Building 200,000 Accumulated Depreciation - Building Accounts Payable Short-term Financial Debt Long-term Financial Debt Common Stock Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Salary & Wage Expense 60,000 Utility Expense Supplies Expense 12,000 Total $ 957,000 $ 8,000 60,000 7.238 92.762 185,200 550,000 25,000 25,000 200,000 30,000 957,000 Transactions Easy Ltd. is a retailer following the perpetual inventory method. Assume that there are no credit transactions and all amounts are settled in cash. The following information for Easy Ltd. for the month of December 2020 are provided below: Unit Cost or Selling Price Date Description Quantity ($) Beginning inventory as stated in trial balance) 500 December 10 Purchase December 12 Purchase return December 20 Sale 800 1.-3. Journalize each of the transactions by following FIFO cost flow assumption. December 1 100 150 600 600 50 125 4.-5. Easy LTD management authorizes a write-off of the $5,000 balance on December 21, 2020. After write-off, aging schedule for Easy LTD is presented below. Number of Days Past Due Customer Total Not Yet Due 1-30 21-60 61-90 Over 90 CI 25,000 5.000 20,000 C2 20.000 10.000 10.000 C3 30,000 130,000 Total 75.000 10,000 10,000 30,000 5,000 20,000 Estimated Percentage Uncollectible 1%6 5% 10% 30% 25% 6. The equipment has no salvage value and a useful life of 10 years. The equipment was purchased at January 1, 2018. There has been no adjustment to account for depreciation for the current year of 2020. Easy LTD applies double declining-balance method for the equipment. After adjusting the depreciation, Easy LTD sold the equipment with sales price of $35.960 in cash. The building has a useful life of 50 years with no salvage value. Building was purchased at January 1, 2019. There has been no adjustment to account for depreciation for the current year of 2020. Easy LTD applies double declining-balance method for the building. 7. Easy LTD borrowed an $100,000,7%, 10-year financial debt at December 31, 2019 with equal annual payments. Journalize the first installment payment occurred at December 31, 2020. After payment, reclassify total financial debt as short-term and long-term and adjust the accounts. 8. Easy LTD paid $12,000 to its insurance company for the next 12 months at December 31, 2020. 9. On December 1, Easy LTD purchased a 25% equity in ABC Company for $18,000. At December 31, ABC reported net income of $16,000 and declared and paid a $3,600 cash dividend. 10. Calculate provision for corporate tax expense by assuming 25% corporate tax rate. Required: a) Open ledger accounts and journalize the transactions. (60%) b) Prepare adjusted trial balance and multiple-step income statement for the period ended December 31, 2020. (10%) c) Prepare a classified statement of financial position as of December 31, 2020. (10%)
