Hello, can you please help me with the adjusting journal entries and the closing entries? I have attached the excel file to be used with this problem.

CM Corporation (CMC) was founded in 2010 by Eric Conner and Phil Martin. The company designs, installs, and services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. In early January 2016, CMC hired you as an accounting intern to assist the CFO and the entire corporate accounting team.

Lately Conner and Martin have been working with ?radio frequency identification? (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory applications in multiple industries. One of the most basic applications is tracking manufacturing components; if tagged components "go walking" (if employees attempt to take them), companies can easily track and find them. Conner and Martin have sold their system to several high-tech companies in the area. These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and competitors. To date, CMC?s cash flow from sales and services has adequately funded its operations.

CMC anticipates growth potential for its products. As a result, it is planning a new public offering of their common stock at the end of 2016. The accounting department is currently quite small and the CFO has requested additional staff to help keep pace with the company?s fast-paced growth. Therefore, as an accounting intern you can immediately become a valuable member to their corporate accounting team. To familiarize you with the company's operations, the CFO has provided an unadjusted trial balance from the end of their last fiscal year (2015) on an Excel spreadsheet.

Instructions

(a) Download the excel file ?CASE 1 ? CMC? which has the unadjusted trial balance with the existing accounts. This file also contains an accounting ?system? comprised of a series of linked spreadsheets. The linkages enable the effects of all accounting entries (journal, adjusting, and closing) to flow through to spreadsheets to update the income statement, balance sheet, and retained earnings. You notice that for the fiscal year ended December 31, 2015, the bookkeeper has made all the routine general journal entries throughout the year, but none of the adjusting or closing entries have been recorded.

The following information is provided for adjustments prior to closing the books. Connor and Martin ask you to enter the adjustments into the spreadsheet using the tab labeled ?AJE?s & Closing Entries?. Also post these adjustments to the Trial Balance in the two columns to the right of the unadjusted trial balance. (CMC uses a perpetual inventory system.) You MUST use cell referencing when posting to the Trial Balance or your grade will be assessed an 8 point penalty.

Adjusting Journal Entries (AJE?s):

1. Wages earned by employees during December (?15) and to be paid in January (?16) are $35,875; associated payroll taxes on these wages are $2,910. (Record in two separate adjusting entries. The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.)

2. The Unearned Consulting Revenue account has a balance of $261,220 as of December 31, 2015. On May 1, 2015 a client paid CMC $153,000 cash in advance for a 12-month consulting services contract. CMC will earn revenue evenly over this 12-month period. This was the only prepayment received from clients during the entire 2015 fiscal year and recorded with a credit to Unearned Revenue. Of the beginning balance in Unearned Revenue (i.e. at Jan 1 2015), 65% of the work has now been completed by year end.

3. You discover that a sale of a product was made on account and recorded in December for $148,500; the product has not yet been shipped (i.e. delivered to the customer). The cost of the product was 55% of its selling price. CMC uses the perpetual inventory method.

4. Bad debt expense is estimated to be 6% of ending Accounts Receivable. (Round to the nearest whole dollar.)

5. CMC prepays for some insurance and advertising. The Prepaid Expense account has a balance of $26,774 at year end but before adjustment. This balance includes $12,200 for a two-year casualty insurance policy purchased on March 1, 2015. Of the remaining prepaid balance, 60% of the advertising has now been used. (Round to the nearest whole dollar.)

6. Annual depreciation rates are 7% for Buildings & Equipment/Furniture. No salvage. (Round to the nearest whole dollar.)

7. The long-term liabilities were outstanding for all of 2015 and accrue interest at 8% APR. CMCrecords accrued interest quarterly (interest was last updated on Sept. 30.) The company is required to pay the interest annually each January 1^st.

8. CMC often allows customers to finance the purchase of their products through long-term lending agreements and therefore reports Long-term Notes Receivable on their Balance Sheet. These notes are interest bearing and earn CMC interest revenue. The beginning balance of Interest Receivable at January 1, 2015 was $3,500. During 2015, cash received from customers for interest on these notes amounted to $17,600. You determine that the income statement for the year-ended December 31, 2015 should show Interest Revenue in the amount of $18,700. The adjusting entry to accrue interest revenue has not yet been recorded.

9. On December 15, CMCdeclareda dividend of $150,000, to be paid on January 20, 2016. It had not yet been recorded.

10. At December 31, the Long-Term Investments (Available-for-sale securities or ?AFS?) had a fair value of $165,700. The AFS Investment was originally purchased on May 1, 2015 for $180,186. CMCuses a ?Fair Value Adjustment? account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. CMC?s tax rate is 35%.

11. Income tax is based on a 35% tax rate.

(b) After making the 11 adjusting entries in (a), record the appropriate closing entries on the spreadsheet provided using the tab labeled ?AJEs and Closing Entries?. Post to the Trial Balance.

(c) Complete the each of the required financial statements (Statement of Comprehensive Income, and Statement of Stockholder?s Equity) in good form. The Statement of Stockholder?s Equity should reconcile with your balance sheet, income statement, & Statement of Comprehensive Income. (Use cell referencing to link the appropriate cells from the other financial statements. Keep in mind that not all cells on the Statement of Stockholder?s Equity will require any updates. For example, no new stock was issued during 2015; the balance in the contributed capital accounts will therefore not change.)

AJE # 1 Account Name DR CR Closing Entries 1 2 2 3 4 5 6 7 3 8 4 9 5 10 11 Account Name DR CR General Ledger Account Name Cash and cash equivalents Accounts Receivable Allowance for doubtful accounts Interest Receivable Inventory Prepaid expenses Other Current Assets Investments Fair Value Adjustment Notes Receivable Building Equipment and furniture Land Accum Depr Goodwill Other intangible assets Accounts Payable Dividends payable Interest payable Unearned Consulting Revenue Wages payable Payroll taxes payable Income tax payable Long term liabilities Common Stock Paid-in capital common stock Treasury Stock Retained Earnings Dividends Accum Other Comprehensive Incom Sales revenue Service revenue Interest Revenue Sales returns Sales discounts Product cost of goods sold Service cost of goods sold Advertising Bad debt expense Depreciation and amortization Professional Dues & subscriptions Gain/loss on disposal Income tax expense Insurance Interest expense Legal and accounting fees Miscellaneous Office expense Payroll taxes Property taxes Repair and maintenance Research and development Telephone Travel and entertainment Utilities Wages Salaries - Officers Income Summary Unrealized Gain/Loss-AFS Unadj. Balance 12/31/15 Debit Credit 72,377 910,680 29,462 0 1,270,160 26,774 16,063 180,186 0 0 220,000 876,418 332,983 348,791 656,465 493,951 213,900 1,169,343 12/31/15 AJEs Debit Credit 41,310 261,220 81,350 8,850 688,500 920,000 105,000 400,000 539,069 0 162,400 269,662 5,384,590 570,811 159,080 0 0 21,470 4,790 0 80,144 41,310 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 0 0 14,926,800 0 9,253,346 1,158,785 14,100 0 0 14,926,800 ### 0 0 Adjusted Balance 12/31/15 Debit Credit 72,377 910,680 29,462 0 1,270,160 26,774 16,063 180,186 0 0 220,000 876,418 332,983 348,791 656,465 493,951 213,900 1,169,343 0 41,310 261,220 81,350 8,850 0 688,500 920,000 105,000 400,000 539,069 0 0 0 9,253,346 1,158,785 14,100 162,400 269,662 5,384,590 570,811 159,080 0 0 21,470 4,790 0 80,144 41,310 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 0 0 0 0 14,926,800 14,926,800 12/31/15 Closing Entries Debit Credit ### 0 0 Post-Closing T/B 12/31/15 Debit Credit 72,377 910,680 29,462 0 1,270,160 26,774 16,063 180,186 0 0 220,000 876,418 332,983 348,791 656,465 493,951 213,900 1,169,343 0 41,310 261,220 81,350 8,850 0 688,500 920,000 105,000 400,000 539,069 0 0 0 9,253,346 1,158,785 14,100 162,400 269,662 5,384,590 570,811 159,080 0 0 21,470 4,790 0 80,144 41,310 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 0 0 0 0 14,926,800 14,926,800 CM Corporation Balance Sheet December 31, 2015 December 31, 2014 Assets Current assets Cash and cash equivalents Accounts receivable Allowance for doubtful accounts Inventory Interest Receivable Prepaid expenses Other current assets Total current assets Long-Term Investments Investments +/-Fair Value Adjustment Notes Receivable Property, plant and equipment Accumulated depreciation Net fixed assets Other Assets Goodwill Other intangible assets $72,377 910,680 (29,462) 1,270,160 0 26,774 16,063 $120,670 516,454 (24,975) 799,460 0 14,574 8,879 2,266,592 180,186 0 180,186 220,000 1,558,192 (656,465) 1,435,062 0 0 1,200,255 (591,965) 901,727 493,951 213,900 Total assets 0 48,000 608,290 87,740 108,700 707,851 196,440 $4,276,356 $2,287,792 Liabilities and Stockholders' Equity Current liabilities Accounts payable Dividends payable Unearned revenue Interest payable Wages payable Payroll taxes payable Income taxes payable Total current liabilities $1,169,343 0 261,220 41,310 81,350 8,850 0 Long-term liabilities $315,395 48,000 108,220 6,500 78,200 9,033 279,850 1,562,073 845,198 688,500 278,525 Stockholders' equity Contributed capital Common stock, $2 par value (4,000,000 shares authorized,460,000 issued; 440,000 are outstanding) 920,000 Paid-in capital common stock 105,000 Total contributed capital 1,025,000 Retained earnings 1,400,783 Accumulated other comprehensive income 0 Less common stock in treasury, at cost (400,000) Total stockholders' equity Total liabilities and stockholders' equity 920,000 105,000 1,025,000 539,069 0 (400,000) 2,025,783 1,164,069 $4,276,356 $2,287,792 CM Corporation Income Statement For the Years Ended December 31, 2015 Revenue Net product sales revenue Service revenue Total revenue Cost of goods sold Products Services Total cost of sales Gross profit Operating expenses Advertising Bad debt expense Depreciation and amortization Dues and subscriptions Insurance Legal and accounting fees Miscellaneous Office expense Payroll taxes Property taxes Repair and maintenance Research and development Telephone Travel and entertainment Utilities Wages - Employees Wages - Officers Total operating expenses $8,821,284 1,158,785 Income (loss) before income taxes Income tax (expense) benefit Net income (loss) $8,984,852 975,860 $9,980,069 5,384,590 570,811 $9,960,712 5,356,018 445,637 5,955,401 4,024,668 159,080 0 0 21,470 80,144 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 Income (loss) from operations Other income and (expense) Interest expense Gain (loss) on disposal of assets Interest Revenue Total other income (expense) December 31, 2014 5,801,655 4,159,057 123,869 28,640 125,500 19,730 90,144 87,650 12,010 214,138 131,170 93,400 37,543 278,000 21,085 60,402 37,876 954,688 650,000 3,130,954 2,965,845 893,714 1,193,212 (41,310) (4,790) 14,100 (27,800) (26,950) 9,230 (32,000) (45,520) 861,714 0 1,147,692 (401,692) $861,714 $746,000 CM Corporation Statement of Comprehensive Income Year Ended December 31, 2015 CM Corporation Statement of Stockholder's Equity as of December 31, 2015 Total Stockholder's Equity Beg. Balance, 1/1/15 Common Stock Issued Common Stock Repurchased Net Income ('15) Other Comprehensive Income ('15) Common Stock Dividend ('15) End. Balance, 12/31/15 Retained Earnings Accumulated Other Comprehensive Income Common Stock Additional Treasury Paid-In Capital Stock