Intelligent Toys, Inc (ITI) is a well establish toys trading company which adopts the periodic system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at 29 February 2020 is presented as follows: Intelligent Toys, Inc Trial Balance As at 29 February 2020 Account No. Account Title Debit Credit ($) ($) 201 Accounts Payable 280,000 112 Accounts Receivable 450,000 152 Accumulated Depreciation - Building 496,800 154 Accumulated Depreciation - Equipment 380,000 156 Accumulated Depreciation - Motor Vehicle 443,112 113 Allowance for Doubtful Accounts 13,500 151 Building 6,480,000 101 Cash 667,680 291 Dividends Payable 80,000 153 Equipment 660,000 115 Interest Receivable 96,000 140 Long-term Investment 500,000 121 Merchandise Inventory 650,000 155 Motor Vehicle 555,000 114 Notes Receivable 1,800,000 131 Prepaid Insurance 12,000 320 Retained Earnings 1,384,808 241 Salaries Payable 70,200 311 Share Capital - Ordinary $1 par value, 5,000,000 shares authorized, 4,000,000 shares issued and 3,985,000 shares outstanding 4,000,000 312 Share Capital - Preference 4%, $100 par value, noncumulative, 50,000 shares authorized, 40,000 shares issued and outstanding 4,000,000 313 Share Premium - Ordinary 560,000 314 Share Premium - Preference 200,000 315 Share Premium - Treasury 6,000 132 Supplies 6,240 330 Treasury Shares (15,000 shares) 37,500 11,914,420 11,914,420 The following activities took place in March: Mar. 1(a) Purchased children laptop toys from Ambrose Limited, $93,000, terms 1/10, n/30, FOB shipping point. (b)The responsible party paid the freight charges of $400. The goods were collected by the shipping company on 1 March and arrived at ITI's warehouse on 4 March. 1(c) Sold 15,000 Treasury shares at $2 each. 1(d) Purchased 10% shareholding in Charlotte Limited, a supplier, as a long-term investment. The fair value of the 10% shareholding was $2,000,000 as at 1 March. The purchase consideration included a $1,800,000 note receivable due from Charlotte Limited and the related interest receivable balance of $96,000, $94,000 cash and a motor vehicle owned by ITI. The motor vehicle was originally obtained at $80,000. 1(e) Sold remote control helicopters valued at $288,000 to Vincent Limited, a wholesaler, terms n/20, FOB destination. The appropriate party paid delivery charges of $500. The goods were shipped on 1 March and arrived at the warehouse of Vincent Limited on 3 March. 2 A 10% share dividend was declared when the market value per share was $2.1. 3 Cash is received from Vincent Limited for the remote-control helicopters shipped on 1 March and arrived at the warehouse of Vincent Limited on 3 March. 4 Sold kids ride on cars to Gavin Limited, $83,300, terms n/30, FOB shipping point. The appropriate party paid freight charges of $315. The goods were shipped on 4 March and arrived at the warehouse of Gavin Limited on 6 March. 5 The management determined that the amount due from a customer, Tommy Limited, $34,500 is uncollectible as the company has closed down. 6 Purchased supplies of $5,800 on account from Jimmy Printing and Stationery Limited 7(a) Paid cash to acquired 20,000 shares of its own at $2.3 each. 7(b) Received credit memorandum of $1,200 from Ambrose Limited for goods purchased in March. 8 Granted Gavin Limited an allowance of $980 (original price) due to discrepancy in the color of the ride on cars. 9 Sold flying disc and toy swings to Action Limited, list price of $82,075 with a 20% trade discount, n/20, FOB shipping point. The responsible party paid freight-charges of $640. The shipping document showed that the goods arrived at the warehouse of Action Limited on 12 March. Mar. 10 Paid Ambrose Limited for the children laptop toys bought on 1 March and the amount of $140,000 on account for the purchase on 28 February Purchases terms with Ambrose Limited in February was 2/10, n/30, FOB shipping point 11 Paid $108,000 for salary up to 10th March (Tuesday). All employees work a five-day week and are paid every four weeks on the following Wednesday, based on the number of days they have worked in the last four weeks. Employees are entitled to full pay on public holidays but not on Saturday and Sunday. 12 Received payments from Gavin Limited, for the March sales. 13 Acquired $100,000 toy musical instruments by signing a 90-day, 5% notes payable. 16 Queenie Company Limited, a customer, has financial difficulties and unable to pay the outstanding balance of $210,000. The company has a long-term relationship with Queenie, and agreed to accept a 12%, 60-day notes from the customer to settle the outstanding balance. 17 Share dividends were distributed. 21 Paid all dividends declared previously. 25 Received from Tom Limited, $120,000, as the prepayment for the leasing of part of the warehouse for one year from 1 April 2020 to 31 March 2021. 27 Delivered inflatable castle of $39,750 on consignment to Vincent Trading Limited. 28 Purchased $23,450 play mats from McMillan Company, FOB Destination, terms 1/10, n/45. The shipping document showed that the goods were received on 3rd April 2020. 29 A cash dividend was declared for preference shares and a cash dividend of $0.04 per share was declared for ordinary shares. 30 Received a check of $15,525 from the liquidator of Tony Limited. Tony Limited was closed down in December 2019 and the managing director of ITI authorized to write off $45,000, being the full amount outstanding in the accounts of Tony Limited, as of then. The following information is available on 31 March 2020: (a) Electricity incurred for the month amounted to $4,800. (b) The employees receive a total salary of $27,000 for a five-day work week. All employees worked for the whole month of March. (c) (i)Building, (ii) equipment and (iii) motor vehicles are recorded at historical cost and their estimated useful lives are 50 years, 5 years and 5 years respectively. No residual value is expected for the building. The building was acquired on 1 May 2016. The company uses straight-line method for all buildings. All the equipment and motor vehicles are acquired on 1 January 2017. The company uses unit of activity method to depreciate equipment and the double-declining balance method to depreciate all motor vehicles. The company expects that the salvage value of the equipment and motor vehicles is 10% of the purchase cost. The equipment is for packing and the total amount of packing for 5 years are estimated to be 594,000 units. The total packing in March amounted to 9,800 units. Annual depreciation is calculated for each year from 1 January to 31 December, monthly depreciation is equal to (annual depreciation /12). (d) Physical count showed that $3,000 of supplies and (e) $698,000 of merchandise inventory remained on hand at 31 March 2020. (f) The prepaid insurance was paid in last December covering a 12-month general insurance from January to December, 2020. Allowance for bad debt is estimated based on 10% of the closing accounts receivable balance due to dramatical down turn of the economy. (h) Recognize interest expense for the month. (i) Recognize interest revenue for the month. Dr/Cr Date Mar 1 (a) Dr Cr Mar 1 (b) Dr Cr *Mar 1 (C) Dr Dr Dr Cr * Mar 1 (d) Dr Long Term Investment Dr Dr Cr Cr Cr Mar 1 (e) Cr Dr Cr Account No. Item 1 Item 3 Items Item 7 Item 9 Item 11 Item 13 Item 15 Item17 Item 19 Item21 Item23 Item25 Item 27 Item29 Item31 Item33 Item35 Item37 Item 39 Item 41 Item 43 Item 45 Item 47 Item 49 Item51 Item53 Item55 Item57 Item 59 Item61 Item63 Amount $ Item 2 Item 4 Item 6 Item 8 Item 10 Item 12 Item 14 Item 16 Item 18 Item 20 Item 22 Item 24 Item 26 Item 28 Item 30 Item 32 Item 34 Item 36 Item 38 Item 40 Item 42 Item 44 Item 46 Item 48 Item 50 Item 52 Item 54 Item 56 Item 58 Item 60 Item 62 Item 64 *Mar 2 Dr Cr Cr Mar 3 Dr Cr Dr Mar 4 Mar 5 Cr Dr Cr Mar 6 Dr Cr Mar 7 (a) Dr Cr Mar 7 (b) Dr Cr Date Mar 8 Dr/Cr Dr Cr Mar 9 Dr Cr *Mar 10 Dr Cr Cr *Mar 11 Dr Dr Cr Mar 12 Dr Cr Mar 13 Dr Cr Account No. Item65 Item67 Item69 Item 71 Item 73 Item 75 Item 77 Item 79 Item 81 Item83 Item85 Item87 Item 89 Item91 Item93 Item 95 Item 97 Item 99 Item 101 Item 103 Item 105 Item 107 Item 109 Item111 Item113 Item 115 Item117 Item 119 Item 121 Mar 16 Dr Amount $ Item 66 Item 68 Item 70 Item 72 Item 74 Item 76 Item 78 Item 80 Item 82 Item 84 Item 86 Item 88 Item 90 Item 92 Item 94 Item 96 Item 98 Item 100 Item 102 Item 104 Item 106 Item 108 Item 110 Item 112 Item 114 Item 116 Item 118 Item 120 Item 122 Item 124 Item 126 Cr Mar 17 Dr Cr Mar 21 Cr Mar 25 Dr Cr Mar 27 Dr Cr Mar 28 Dr Cr Mar 29 Dr Cr Mar 30 Dr Cr Item 123 Dr Cash Item 125 Item 127 Cr Item 128 Date Dr/Cr Account No. Amount $ (a) Dr Item 129 Item 130 Cr Item131 Item 132 (b) Dr Item 133 Item 134 Cr Item135 Item 136 (c)(i) Dr Item137 Item 138 Cr Item139 Item 140 (c)(ii) Dr Item141 Item 142 Cr Item143 Item 144 (c)(iii) Dr Item 145 Item 146 Cr Item147 Item 148 (d) Dr Item149 Item 150 Cr Item 151 Item 152 (e) Dr Item 153 Item 154 Cr Item155 Item 156 (1) Dr Item 157 Item 158 Cr Item159 Item 160 g Dr Item161 Item 162 Cr Item 163 Item 164 (h) Dr Item 165 Item 166 Cr Item 167 Item 168 (i) Dr Item169 Item 170 Cr Item171 Item 172 Adjusted Trial Balance as at 31 March 2020 Dr s Cr $ Account No 201 112 152 154 156 113 611 151 101 711 712 713 291 153 514 612 613 820 615 631 221 115 415 150 140 620 121 630 Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor vehicle Allowance for Doubtful Accounts Bad Debt Expense Building Cash Depreciation Expense - Building Depreciation Expense - Equipment Depreciation Expense - Motor Vehicle Dividends yable Equipment Freight-in Freight-out Fuel Expense Gain on Disposal Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Land Long-term Investment Loss on Disposal Merchandise Inventory Miscellaneous Expense Motor Vehicle Notes Payable Notes Receivable Ordinary Share Dividends Distributable Prepaid Insurance Purchase Discounts Purchase Returns and Allowances Purchases Retained Earnings Salaries Expense Salaries Payable Sales Returns and Allowances Sales Revenue Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Preference Share Premium - Treasury Supplies Supplies Expense Treasury Shares Unearned Rent Revenue Utilities Expense Item 173 Item 174 Item 175 Item 176 Item 177 Item 178 Item 179 Item 180 Item 181 Item 182 Item 183 Item 184 Item 185 Item 186 Item 187 Item 188 Item 189 Item 190 Item 191 Item 192 Item 193 Item 194 Item 195 Item 196 Item 197 Item 198 Item 199 Item 200 Item 201 Item 202 Item 203 Item 204 Item 205 Item 206 Item 207 Item 208 Item 209 Item 210 Item 211 Item 212 Item 213 Item 214 Item 215 Item 216 Item 217 Item 218 Item 219 Item 220 Item 221 Item 222 Item 223 155 231 114 292 131 513 512 511 320 616 241 411 410 311 312 313 314 315 132 618 330 281 619 Item 224 Item 225 7 Requirement 4 (78 points) 5 points for each item except Item 234 Intelligent Toys, Inc. Income Statement For the month ended 31 March 2020 Net Sales Item 226 Cost of goods purchased Item 227 Cost of goods available for sale Item 228 Cost of Goods Sold Gross Profit Item 229 Item 230 Total operation expense Item 231 Operating Profit Item 232 Net Income Item 233 Intelligent Toys, Inc. Retained Earnings Statement For the month ended 31 March 2020 Ending retained Earnings (3 points) Item 234 Intelligent Toys, Inc. Statement of Financial Position as at 31 March 2020 Property, Plant and Equipment Current Liabilities Item 239 Sub-total Long Term Investments Current Assets Item 235 Item 236 Sub-total Equity Sub-total Total Assets Item 237 Item 238 Sub-total Total Liabilities & Equity Item 240 Item 241