INSTRUCTIONS: Katelyn's Catering ("Katelyn") provides food services for corporate events. In the month of December 2019, she was very busy with catering events and didn't have time to keep up with her accounting records until she got a break at the end of the year. Katelyn asked her business friend, a Bentley student, to help her update her accounting records for the year ended December 2019. Katelyn has an unadjusted trial balance (see "Unadjusted Trial Balance" tab) with information. The Bentley student found that she still needed to record 5 regular transactional journal entries and 5 adjusting journal entries in order to close the books for the year (See the "Regular and AJE Info" tab). In order to close out the year-end, Katelyn needs help from the Bentley student as follows: 1. Prepare the 5 regular journal entries and the 5 AJE's (using proper debits and credits), showing them on the "Journal Entries" tab in this file. 2. Update the balances in the Unadjusted Trial Balance to reflect the journal entries recorded in #1 above. NOTE: This section will not be graded, but you want to pick a method of arriving at an Adjusted Trial Balance that is easiest for you. You can choose one of a few different ways: 1. Use the Financial Statement Effects Template (FSET) - See "FSET" tab in this file 2. Use T accounts to post your entries and arrive at ending balances - See "T Accounts" tab in this file. 3. Post the entries with an adjustments column to the right of the Unadjusted Trial Balance and add/subtract the debits and credits appropriately to arrive at two columns for an "Adjusted Trial Balance." Use the "Unadjusted Trial Balance" tab to build from there. 3. Prepare the following financial statements in proper form (see examples in your text). Place each financial statement on the applicable tab on this file. Assignment Grading Total Points 50 a. Income Statement b. Statement of Changes in Stockholders' Equity c. Balance Sheet SUBMISSION: * Please submit your solution to Problem Set #1 in an excel file through BlackBoard. There will be an assignment tab under Week 1 for submission of this Problem Set. 20 10 20 100 Katelyn's Catering Unadjusted Trial Balance For the year ended 12/31/19 Unadjusted Trial Balance Debit Credit Cash $ 71,000 Accounts Receivable 44,000 Food Supplies Inventory 25,000 Prepaid Rent 13,000 Equipment 60,000 Accumulated Depreciation $ 6,000 Accounts Payable 12,000 Interest Payable 0 Unearned Revenue 32,000 Notes Payable 10,000 Common Stock 20,000 Retained Earnings 1/1/19 42,000 Catering Revenue 250,000 Salary Expense 75,000 Food Supplies Expense 60,000 Advertising Expense 0 Rent Expense 11,000 Insurance Expense 5,500 Utilities Expense Interest Expense Depreciation Expense 6,000 1,000 500 Total $ 372,000 $ 372,000 0 Katelyn's Catering REGULAR JOURNAL ENTRIES: Transaction 1 Katelyn catered a holiday party for her neighbor in December, who paid her $1,000 in cash. Transaction 2 Katelyn paid $3,500 of an accounts payable vendor balance in December. Transaction 3 Katelyn returned some food supplies inventory to a vendor who reimbursed her $500 cash. Transaction 4 Katelyn paid her employees their December monthly salaries of $22,000. Transaction 5 Katelyn borrowed $20,000 from her bank in order to front the food supplies cost of a few large corporate events in 2020. ADJUSTING JOURNAL ENTRIES: NOTE: Adjusting entries are generally recorded every month, and all prior entries have been properly recorded. Only the below AJE's for December still need to be recorded. Transaction 1 Transaction 2 Transaction 3. Transaction 4 Transaction 5 Katelyn catered a New Year's Eve party and since the party went into 2020, she left an invoice with the host that night for $6,500 to pay her for the services by January 15, 2020. Katelyn realized she had done a few home events that she had taken deposits on but never recorded the revenue on $10,000 of events she provided in December. In prior months when Katelyn received the cash deposits, she had properly recorded them to unearned revenue. Katelyn and her Bentley student did a count of her food supplies inventory and found that the value of the Food Supplies Inventory was $10,000 at December 31, 2019. The Equipment has a useful life of 10 years and was purchased in 2018. No depreciation was recorded yet for 2019. The Note Payable of $10,000 was signed on December 1, 2019. One month's interest must be accrued. The interest rate is 6% per year (APR). Note is due on December 1, 2022. Katelyn's Catering FSET Template Beginning Balance Cash Accounts Receivable Food Supplies Inventory Accumulated Prepaid Rent Equipment Depreciation Accounts Payable Transaction 1 Transaction 2 Transaction 3 Transaction 4 Transaction 5 AJE 1 AJE 2 AJE 3 AJE 4 AJE 5 Ending Balance NOTE: You can use this sheet as one of your methods to get to the Adjusted Trial Balance Unearned Accounts Payable Interest Payable Revenue Notes Payable Common Stock Retained Earnings Catering Revenue Food Supplies Insurance Depreciation Salary Expense Expense Rent Expense Expense Interest Expense Expense