Innovative Design Corporation (IDC) is a merchandizing company that specializes in motor vehicles. The company was formally established on June 1^st , 2017 by issuing shares to investors. Inventory of IDC is accounted for by specific identification, perpetual inventory system. Straight-line depreciation is used for all the plant assets. Useful lifes for building, furniture and fittings and motor vehicle are 30 years, 15 years and 10 years respectively. No residual value is expected. IDC records a full months depreciation in the month of acquisition, and no depreciation in the month of disposal. Financial statements of IDC are prepared for each month. The post-closing trial balance of IDC as at July 31^st, 2018 is as follows:

Innovative Design Corporation
POST-CLOSING TRIAL BALANCE
AS AT JULY 31st 2018
Account	Balance ($)
	Debit	Credit
Cash	4,182,580
Accounts Receivable	24,722,000
Inventory	15,368,000
Prepaid Rent	480,000
Supplies	18,000
Building	36,500,000
Accumulated Depreciation Building		1,419,444
Motor Vehicle	1,800,000
Accumulated Depreciation Motor Vehicle		150,000
Furniture and Fittings	1,530,000
Accumulated Depreciation Furniture and Fittings		34,000
Accounts Payable		18,848,500
Notes Payable (repayable Dec 31, 2018)		1,050,000
Dividends Payable		1,200,000
Office Salaries Payable		710,000
Wages Payable		689,000
Utilities Payable		132,000
Interest Payable		12,250
Share Capital - Preference, 6%, $100 par value, 200,000 authorized, issued and outstanding		20,000,000
Share Capital - Ordinary, $1 par, 20,000,000 shares authorized, 1,024,500 shares issued and outstanding		10,245,000
Share Premium - Preference		7,528,000
Share Premium - Ordinary		16,308,329
Retained Earnings		6,274,057
	84,600,580	84,600,580

The following transactions took place in August 2018:

1. Purchased 25 X-class family cars from Bercedez-Menz. Catalogue price is $260,000 per car, trade discounts are 5% for orders over 10 and 8% for orders over 20. Terms: 2/15, n/30.
2. Paid office salaries, wages, and utilities, accrued last month, for $680,000, $650,000 and $132,000 respectively.

Received payment from SpeedyDelivery for the 10 Yotoya MPVs (Multi-purpose Vehicles) sold on June 20^th. The sales invoice amount was $5,984,000 under terms 1/5, n/20. Each of these MPVs cost IDC $428,000.

3. Sold 20 green energy Donha trucks to SpeedyDelivery at $185,000 each. SpeedyDelivery paid 50% in cash and the rest in a 3-month 4% note. Both interest and principal will be paid when the note gets due. Cost of each truck to IDC was $100,800.

6. IDC has 6 motor vehicles in use, each costing $300,000. Four were acquired when the company was first established and the other two were acquired 6 months later. As the sole agent for Bercedez-Menz in Hong Kong, IDC is provided a priority to buy its latest green energy luxury model at a cash price of $788,800 (expected retail price $1,088,800, limited to 1 car for each agent), plus one used motor vehicle of any brand name. In order to build up IDCs image in being an advocate for environmentally friendly vehicles, the CEO decides to take the offer and replace one of the oldest vehicles. The cash price is satisfied by $288,800 in cash and a 3-month bank loan at 2.5%.

8. Paid annual comprehensive insurance of $154,000 for August 2018 to July 2019. The insurance company offered an extension of the coverage from 1 year to 14 months covering August 1^st, 2018 to September 30^th, 2019
9. Paid to YoceYoal for the 40 trucks purchased last month, invoice price of each truck was $118,600. A 2% discount was taken due to the earlier payment.
10. Sold 5 X-class Bercedez-Menz cars to Quick Trans, from the purchase earlier this month, at $388,000 each, terms FOB destination, 1/10, n/EOM.

13. Received payment from SureWin for the 15 luxury cars sold last month, selling price was $881,288 each, no discount offered.

Returned 1 family car purchased earlier this month to Bercedez-Menz for the scratches found on the doors and paid for the rest from the same batch.

16. Paid the delivery charge of the sales on the 10^th to Quick Trans, $162,000 and purchased supplies of $5,800 on account.

20 GoGoGo, an overseas customer that provides limousine services, reported that one of the luxury family cars bought last month was ofwrong color. After negotiation, it was agreed that IDC would provide an allowance of $20,000. GoGoGo has not paid for the cars yet.

21 Paid the accrued dividends for preference shares.

25. Received bills for electricity, water and gas, totaled at $118,000 (use a separate payable account). Received payment for the 5 X-class Bercedez-Menz cars sold earlier this month.

28. Accrued salaries and wages for the month are $720,600 and $650,400 respectively.

28 The prepaid rent was for a showroom in Shanghai, covering 12 months starting from December 1^st last year.

31 The notes payable in the trial balance as at July 31^st is a one year 2% note. Interest and principal will be paid when the note gets due.

31 Physical inventory shows that the supplies on hand were $9,200.

In addition to the accounts used in the Trial Balance, Innovative Design Corporation also uses the following accounts:

Cost of Goods Sold	Office Salaries Expense
Freight Out Expense	Prepaid Insurance
Depreciation Expense - Building	Prepaid Rent
Depreciation Expense - Motor Vehicle	Rent Expense
Depreciation Expense - Furniture and Fittings	Sales Discounts
Gain on Disposal	Sales Returns & Allowances
Insurance Expense	Sales Revenue
Interest Expense	Short-term Bank Loan
Interest Receivable	Supplies Expense
Interest Revenue	Utilities Expense
Notes Receivable	Wages Expense

Required:

1. Journalize, in general journal, all August transactions, including ALL necessary adjustments (no need to provide short explanations and round your answers to the nearest dollar).

(17 mark)

2. Prepare an income statement for the month ended August 31^st, 2018, and a retained earnings statement for the month ended August 31^st, 2018.

(23 mark)