It was November 2020, and Jane Levingson, owner of Harmony by Jane Candle Company (HJCC), was reviewing the company's financial performance for its third fiscal year. To update the accounting records, Levingson gathered HJCC's fiscal 2019 balance sheet (Exhibit 1) and the bookkeeper's list of cash receipts and disbursements for fiscal 2020 (Exhibit 2). The bookkeeper had already recorded the fiscal 2020 cash transactions, but may have done so incorrectly. Levingson recorded the opening balances, cash receipts, and cash disbursements to calculate the unadjusted trial balances for fiscal 2020 (Exhibit 3). Levingson started with the unadjusted trial balances and planned to use the balance sheet and the list of cash receipts and disbursements for reference, if necessary. She would have to figure out where each entry had been posted, determine whether it required an adjustment, and adjust accordingly. HARMONY BY JANE CANDLE COMPANY HJCC was a candle manufacturer located in Scranton, Newfoundland, Canada. HJCC sold candles to local gift shops and directly to end consumers through its online web portal. In fiscal 2020, HJCC sold a total of 11,520 candles. Gift shop customers purchased candles for the wholesale price of S16 per candle in fiscal 2020 and accounted for 35 per cent of total unit sales. Gift shop customers always paid on account with credit terms of net 20. End consumers purchased candles from HJCC's online store for $18 in fiscal 2020 and always paid with cash at the time of purchase. All sales, regardless of payment method, were subject to a 15 per cent harmonized sales tax (HST) on the net invoice price. HJCC had yet to record sales taxes for the credit sales at fiscal year-end. The bookkeeper had recorded the sales taxes on cash sales and the payment of all sales tax remittances for cash sales and cash collections. There were no finished goods in transit at fiscal year-end THE MANUFACTURING PROCESS HJCC manufactured wax candles with scents of bonfire, tranquility, and cabernet. The first step in the production process was to measure the wax pellets that would be used to create the candle. The wax was then melted and fragrances were added. The melted wax was poured into a jar with a wick. Finally, before moving the candle to finished goods storage, the jar was labelled and packaged. Since direct labour was required throughout the production process, Levingson considered direct labour hours to be most evenly distributed. HUMAN RESOURCES In fiscal 2020, Levingson worked a total of 1,500 hours and curned an annual salary of $48,000. Levingson spent 30 per cent of her time manufacturing the candles, 45 per cent of her time helping a part-time administrative assistant and the remainder supervising the production workers, Raymond Hunter, the part-time administrative assistant, was paid a monthly salary of $1,750. Levingson paid herself and the administrative assistant on the last day of the month for that month's work. HJCC employed two part-time production workers solely to manufacture the candles. They were each paid an hourly wage of $17.00. The two production workers worked a combined total of 1,932 hours in all of fiscal 2020 and were paid every Tuesday for the previous week's work. At the end of fiscal 2020, the production workers had not been paid for 16 hours cach. Levingson also employed a part-time production supervisor. The production supervisor was paid an annual salary of $23,500 in fiscal 2020 and was paid on the last day of the month for that month's work. In fiscal 2020, the production supervisor had worked a total of 880 hours. Levingson hired a part-time delivery driver in June 2020 to operate the new delivery van. The delivery driver was paid $16.50 per hour and had been paid for a total of 320 hours by the end of fiscal 2020. The driver was paid every Tuesday for the previous week's work. At the end of fiscal 2020, the delivery driver had not yet been paid for 10 hours of work. LONG-LIVED ASSETS On January 1, 2020, HJCC purchased the land and building that it had previously rented. Upon signing the rental agreement in fiscal 2019, a deposit for the last month's rent payment had been required. The land and building had an agreed upon purchase price of $400,000 and was paid for with 20,000 common shares. On the date of purchase, HJCC's common shares were trading at $20.65 per share. Of the purchase price, 80 per cent related to the building. The building was 1,600 square feet in total and was depreciated using the straight-line method. The administrative office used 150 square feet of space and the finished goods storage area used 250 square feet of space, the remainder of the building was used for production. On April 3, 2020, HJCC received a property tax bill of 54,800 for the 2020 calendar year. Levingson paid the property tax bill on April 29, 2020, On June 1, 2020, HJCC purchased a delivery van for $14,000 cash. The delivery van was used exclusively for delivering finished goods to end consumers. The delivery van was depreciated using the straight-line method. The van had a useful life of eight years and a residual value of $2.000 All other long-lived assets on the fiscal 2019 statement of financial position had been purchased on the date of incorporation and were depreciated using the straight-line method. No repairs, impairments, or changes to the residual value had occurred since the assets were purchased. OPERATIONS Upon incorporation, Levingson took out a $40,000, ten-year bank loan the principal and interest were paid in one payment on the last day of every month throughout the term of the loan. The bank loan would be repaid evenly over the 10 years The rontal agroomont onded on December 31, 2010, The building had a useful le or 20 years and a residual value of $30,000 The existing insurance policy was an 18-month policy purchased on November 1, 2018. The insurance policy was both a product and period cost. Levingson estimated that 80 per cent of the policy's cost was related to HJCC'S production facilities while the remainder covered a variety of non-production-related business risks. Upon expiration of the existing policy, Levingson purchased a new 18- month policy for $4,500 with the same coverage. At fiscal year-end, HJCC had some bills that remained unpaid. One of the bills in accounts payable at year-end for fiscal 2020 was an outstanding utilities bill for $756. HJCC paid its utilities bills on the fifteenth of the month for the previous month's usage. Ninety percent of the total utilities expense was related to production activities. INVENTORIES HJCC had three raw materials: wax, jars, and wicks. HJCC purchased its wax from two suppliers: Dahlia Apothecary and Wax and Stuff. All wax shipments were made FOB shipping point. HJCC used the first-in, first- out method to value the ending balance in all raw materials. A physical inventory count revealed 3,054 lb. of wax on-hand at fiscal year-end. The most recent wax purchases were as follows: Date Delivered Supplier Dahlia Apothecary Dahlia Apothecary Wax and Stuff Wax and Stuff Dahlia Apothecary Wax and Stuff Date Shipped Oct. 26/19 Dec. 4/19 Feb. 12/20 Apr. 23/20 May 24/20 Oct. 28/20 Oct. 30/19 Dec. 7/19 Feb. 14/20 Apr. 29/20 May 28/20 Date Paid Nov. 2/19 Dec. 10/19 Feb. 28/20 May 5/20 Jun, 3/20 Quantity (ib.) 1,856 1,200 1,080 600 3,300 720 Net Cost $3,397 $2,160 $1,909 $1,561 S6,234 $1,638 Jars were purchased from Pawnee Jars who shipped FOB destination. At fiscal year-end, a physical inventory count revealed that $2,535 worth of jars remained on hand. Wicks were purchased from Wicked Goods who shipped FOB destination and offered credit terms of 8 EOM. At fiscal year-end, a physical inventory count revealed that $631 worth of wicks remained on hand. During fiscal 2020, HJCC used $283 worth of production supplies. The production supplies consisted of candle fragrances, labels, and ribbons. Levingson found these production supplies difficult to trace to individual candles. At fiscal year-end, the production workers had spent a total of 13 hours manufacturing the partially completed goods. In addition, Levingson had spent three hours of her time manufacturing the partially completed goods. Levingson estimated that $164 worth of raw materials had been used to manufacture the partially completed goods. At fiscal year-end, a physical inventory count revealed there were 1,700 completed candles in finished goods The net cost included all applicable charges and discounta. The October 26 order from Dahlia Apothecary had been recorded as accounts payable in fiscal 2019 at the gross invoice price of $3,501. The bookkeeper had correctly recorded the payment and discount for the order in the fiscal 2020 cash disbursements. inventory. No units had been damaged or stolen during the fiscal year. Finished goods on hand at fiscal year-end were valued using the average cost method. REQUIRED As Jane Levingson, using the super-T provided, post all transactions and adjusting entries required for Harmony by Janc Candle Company's fiscal year, ending October 31, 2020. Closing entries are not required. STATEMENT OF FINANCIAL POSITION As at October 31, 2019 ASSETS S Current assets: Cash Accounts receivable Prepaid insurance Prepaid rent Inventory Production supplies Total current assets Long-lived assets: Office equipment Accumulated depreciation - office equipment Production equipment Accumulated depreciation - production equipment Total long-lived assets 127,365 6,863 1,320 1,500 20,573 40 157,661 S 6,000 2.400 4,800 2.400 3,600 2.400 6,000 Total assets $ 163,661 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable" Current portion, bank loan Income tax payable Sales tax payable Production wages payable Total current liabilities 4,077 4,000 5.941 895 442 15,355 Long-term liabilities: Long-term portion, bank loan Total long-term liabilities 28.000 28.000 Total liabilities 43,355 Shareholders' equity: Common stock (5,000 outstanding, unlimited authorization) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 90,000 30,306 120,306 S 163,661 * No bad debts had been experienced in fiscal 2019 and none were expected in fiscal 2020. There was $5,420 of wax, $1,217 of jars, and $251 of wicks in raw materials inventory and $1,256 of work-in process inventory on October 31, 2019. There were also 1,220 candles, valued at $12,429, in finished goods inventory on October 31, 2019 The production equipment had a useful life of four years with no residual value. Includes all applicable charges relating to utilities and raw materials inventory not yet paid for. On the provided Super-T, cash receipts are marked with the trail number (R) and cash disbursements are marked with (D). 10 Includes accrued interest * Includes accrued wages from fiscal 2019, 12 Includes all applicable charges. Exhibit 3 UNADJUSTED TRIAL BALANCE As at October 31, 2020 $ 123.727 S 66,770 1.500 1.320 17.180 13,799 2,338 1,256 12.429 326 14,000 6,000 2.400 4.800 Cash Accounts receivable Prepaid rent Prepaid insurance Raw material, wax Raw material, jars Raw material, wicks Work-in-process Finished goods Production supplies Delivery van Office equipment Accumulated depreciation, office equipment Production equipment Accumulated depreciation, production equipment Production wages payable Sales tax payable Current portion, bank loan Long-term portion, bank loan Common stock Retained earnings Net sales Salaries expense Production wages expense Delivery wages expense Insurance expense Utilities expense Property tax expense Rent expense Total 2,400 8,709 2.112 28,000 90,000 30,306 134,784 92,500 32,742 5.280 4,500 4,284 4.800 1,500 355, 102 S 355,102 NOTE/R/ indicates cash receipts as recorded by the bookkeeper from Extvbt2: Dindicates cash disbursements es recorded by the bookkeeper fror Cash 127,365 228,635 (RI D 232,273 123,727 UTIB Accounts receivable , IRI 73.633 UTE 66.770 ASSETS Raw materials, as Raw materials, was 1,217 018 5,4200 e 12,582 10 11,70010) 13,799 UT/B 17,180 WTB Finished goods 12,429 O/B 12,429 UTE Work-in-process 1.2560B 1.250 UTE Prepaid insurance 1320018 1.320 UT Prepaid rent 1.500 DB 1.500 UT/B Raw materials, wicks 251 Ove 2,087 10 2,338 UTIB Olfice equipment 6.000018 6.000 UTAB Production equipment 4.600 OB 4,800 UTB Production supplies 400V 200 DI 326 UT 8 AD office equipment O/B 2,400 UTB 2400 A/D.prod equipment OVB 2.400 UTIE 2,400 Delivery van 14,000 14.000 UTB Rent expense 1,500.00 1,500JUT/B Insurance expenso 45000) 4.600 UTB EXPENSES Production wiges Salaries e perse expanse 92,500 101 32.7420 92,500 UT/B 32.742 UTE Delivery wages expone 5,28010 5,280 UTIB Property tax expense 4800 101 4 800 UTB Utos expense 4,2840 4,284 UT/B n Exhibit 2 LIABILITIES & EQUITY loan loan O/B 4,000 O/B 6,5120) UT/B 2.512 UT/B Sales tax payable O/B 895 IRI 20,218 29,822 D 8,709 UT/B 442 payable O/B UT/B 28,000 28,000 442 Accounts payable O/B 4,077 4,077 [0] UT/B 0 Income tax payable O/B 5.941 5,9410 UT/B 0 Common stock O/B 90,000 UT/B 90,000 Retained earnings O/B 30,306 UT/B 30,306 REVENUE Sales revenue [R] 134,784 UT/B 134,784 It was November 2020, and Jane Levingson, owner of Harmony by Jane Candle Company (HJCC), was reviewing the company's financial performance for its third fiscal year. To update the accounting records, Levingson gathered HJCC's fiscal 2019 balance sheet (Exhibit 1) and the bookkeeper's list of cash receipts and disbursements for fiscal 2020 (Exhibit 2). The bookkeeper had already recorded the fiscal 2020 cash transactions, but may have done so incorrectly. Levingson recorded the opening balances, cash receipts, and cash disbursements to calculate the unadjusted trial balances for fiscal 2020 (Exhibit 3). Levingson started with the unadjusted trial balances and planned to use the balance sheet and the list of cash receipts and disbursements for reference, if necessary. She would have to figure out where each entry had been posted, determine whether it required an adjustment, and adjust accordingly. HARMONY BY JANE CANDLE COMPANY HJCC was a candle manufacturer located in Scranton, Newfoundland, Canada. HJCC sold candles to local gift shops and directly to end consumers through its online web portal. In fiscal 2020, HJCC sold a total of 11,520 candles. Gift shop customers purchased candles for the wholesale price of S16 per candle in fiscal 2020 and accounted for 35 per cent of total unit sales. Gift shop customers always paid on account with credit terms of net 20. End consumers purchased candles from HJCC's online store for $18 in fiscal 2020 and always paid with cash at the time of purchase. All sales, regardless of payment method, were subject to a 15 per cent harmonized sales tax (HST) on the net invoice price. HJCC had yet to record sales taxes for the credit sales at fiscal year-end. The bookkeeper had recorded the sales taxes on cash sales and the payment of all sales tax remittances for cash sales and cash collections. There were no finished goods in transit at fiscal year-end THE MANUFACTURING PROCESS HJCC manufactured wax candles with scents of bonfire, tranquility, and cabernet. The first step in the production process was to measure the wax pellets that would be used to create the candle. The wax was then melted and fragrances were added. The melted wax was poured into a jar with a wick. Finally, before moving the candle to finished goods storage, the jar was labelled and packaged. Since direct labour was required throughout the production process, Levingson considered direct labour hours to be most evenly distributed. HUMAN RESOURCES In fiscal 2020, Levingson worked a total of 1,500 hours and curned an annual salary of $48,000. Levingson spent 30 per cent of her time manufacturing the candles, 45 per cent of her time helping a part-time administrative assistant and the remainder supervising the production workers, Raymond Hunter, the part-time administrative assistant, was paid a monthly salary of $1,750. Levingson paid herself and the administrative assistant on the last day of the month for that month's work. HJCC employed two part-time production workers solely to manufacture the candles. They were each paid an hourly wage of $17.00. The two production workers worked a combined total of 1,932 hours in all of fiscal 2020 and were paid every Tuesday for the previous week's work. At the end of fiscal 2020, the production workers had not been paid for 16 hours cach. Levingson also employed a part-time production supervisor. The production supervisor was paid an annual salary of $23,500 in fiscal 2020 and was paid on the last day of the month for that month's work. In fiscal 2020, the production supervisor had worked a total of 880 hours. Levingson hired a part-time delivery driver in June 2020 to operate the new delivery van. The delivery driver was paid $16.50 per hour and had been paid for a total of 320 hours by the end of fiscal 2020. The driver was paid every Tuesday for the previous week's work. At the end of fiscal 2020, the delivery driver had not yet been paid for 10 hours of work. LONG-LIVED ASSETS On January 1, 2020, HJCC purchased the land and building that it had previously rented. Upon signing the rental agreement in fiscal 2019, a deposit for the last month's rent payment had been required. The land and building had an agreed upon purchase price of $400,000 and was paid for with 20,000 common shares. On the date of purchase, HJCC's common shares were trading at $20.65 per share. Of the purchase price, 80 per cent related to the building. The building was 1,600 square feet in total and was depreciated using the straight-line method. The administrative office used 150 square feet of space and the finished goods storage area used 250 square feet of space, the remainder of the building was used for production. On April 3, 2020, HJCC received a property tax bill of 54,800 for the 2020 calendar year. Levingson paid the property tax bill on April 29, 2020, On June 1, 2020, HJCC purchased a delivery van for $14,000 cash. The delivery van was used exclusively for delivering finished goods to end consumers. The delivery van was depreciated using the straight-line method. The van had a useful life of eight years and a residual value of $2.000 All other long-lived assets on the fiscal 2019 statement of financial position had been purchased on the date of incorporation and were depreciated using the straight-line method. No repairs, impairments, or changes to the residual value had occurred since the assets were purchased. OPERATIONS Upon incorporation, Levingson took out a $40,000, ten-year bank loan the principal and interest were paid in one payment on the last day of every month throughout the term of the loan. The bank loan would be repaid evenly over the 10 years The rontal agroomont onded on December 31, 2010, The building had a useful le or 20 years and a residual value of $30,000 The existing insurance policy was an 18-month policy purchased on November 1, 2018. The insurance policy was both a product and period cost. Levingson estimated that 80 per cent of the policy's cost was related to HJCC'S production facilities while the remainder covered a variety of non-production-related business risks. Upon expiration of the existing policy, Levingson purchased a new 18- month policy for $4,500 with the same coverage. At fiscal year-end, HJCC had some bills that remained unpaid. One of the bills in accounts payable at year-end for fiscal 2020 was an outstanding utilities bill for $756. HJCC paid its utilities bills on the fifteenth of the month for the previous month's usage. Ninety percent of the total utilities expense was related to production activities. INVENTORIES HJCC had three raw materials: wax, jars, and wicks. HJCC purchased its wax from two suppliers: Dahlia Apothecary and Wax and Stuff. All wax shipments were made FOB shipping point. HJCC used the first-in, first- out method to value the ending balance in all raw materials. A physical inventory count revealed 3,054 lb. of wax on-hand at fiscal year-end. The most recent wax purchases were as follows: Date Delivered Supplier Dahlia Apothecary Dahlia Apothecary Wax and Stuff Wax and Stuff Dahlia Apothecary Wax and Stuff Date Shipped Oct. 26/19 Dec. 4/19 Feb. 12/20 Apr. 23/20 May 24/20 Oct. 28/20 Oct. 30/19 Dec. 7/19 Feb. 14/20 Apr. 29/20 May 28/20 Date Paid Nov. 2/19 Dec. 10/19 Feb. 28/20 May 5/20 Jun, 3/20 Quantity (ib.) 1,856 1,200 1,080 600 3,300 720 Net Cost $3,397 $2,160 $1,909 $1,561 S6,234 $1,638 Jars were purchased from Pawnee Jars who shipped FOB destination. At fiscal year-end, a physical inventory count revealed that $2,535 worth of jars remained on hand. Wicks were purchased from Wicked Goods who shipped FOB destination and offered credit terms of 8 EOM. At fiscal year-end, a physical inventory count revealed that $631 worth of wicks remained on hand. During fiscal 2020, HJCC used $283 worth of production supplies. The production supplies consisted of candle fragrances, labels, and ribbons. Levingson found these production supplies difficult to trace to individual candles. At fiscal year-end, the production workers had spent a total of 13 hours manufacturing the partially completed goods. In addition, Levingson had spent three hours of her time manufacturing the partially completed goods. Levingson estimated that $164 worth of raw materials had been used to manufacture the partially completed goods. At fiscal year-end, a physical inventory count revealed there were 1,700 completed candles in finished goods The net cost included all applicable charges and discounta. The October 26 order from Dahlia Apothecary had been recorded as accounts payable in fiscal 2019 at the gross invoice price of $3,501. The bookkeeper had correctly recorded the payment and discount for the order in the fiscal 2020 cash disbursements. inventory. No units had been damaged or stolen during the fiscal year. Finished goods on hand at fiscal year-end were valued using the average cost method. REQUIRED As Jane Levingson, using the super-T provided, post all transactions and adjusting entries required for Harmony by Janc Candle Company's fiscal year, ending October 31, 2020. Closing entries are not required. STATEMENT OF FINANCIAL POSITION As at October 31, 2019 ASSETS S Current assets: Cash Accounts receivable Prepaid insurance Prepaid rent Inventory Production supplies Total current assets Long-lived assets: Office equipment Accumulated depreciation - office equipment Production equipment Accumulated depreciation - production equipment Total long-lived assets 127,365 6,863 1,320 1,500 20,573 40 157,661 S 6,000 2.400 4,800 2.400 3,600 2.400 6,000 Total assets $ 163,661 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable" Current portion, bank loan Income tax payable Sales tax payable Production wages payable Total current liabilities 4,077 4,000 5.941 895 442 15,355 Long-term liabilities: Long-term portion, bank loan Total long-term liabilities 28.000 28.000 Total liabilities 43,355 Shareholders' equity: Common stock (5,000 outstanding, unlimited authorization) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 90,000 30,306 120,306 S 163,661 * No bad debts had been experienced in fiscal 2019 and none were expected in fiscal 2020. There was $5,420 of wax, $1,217 of jars, and $251 of wicks in raw materials inventory and $1,256 of work-in process inventory on October 31, 2019. There were also 1,220 candles, valued at $12,429, in finished goods inventory on October 31, 2019 The production equipment had a useful life of four years with no residual value. Includes all applicable charges relating to utilities and raw materials inventory not yet paid for. On the provided Super-T, cash receipts are marked with the trail number (R) and cash disbursements are marked with (D). 10 Includes accrued interest * Includes accrued wages from fiscal 2019, 12 Includes all applicable charges. Exhibit 3 UNADJUSTED TRIAL BALANCE As at October 31, 2020 $ 123.727 S 66,770 1.500 1.320 17.180 13,799 2,338 1,256 12.429 326 14,000 6,000 2.400 4.800 Cash Accounts receivable Prepaid rent Prepaid insurance Raw material, wax Raw material, jars Raw material, wicks Work-in-process Finished goods Production supplies Delivery van Office equipment Accumulated depreciation, office equipment Production equipment Accumulated depreciation, production equipment Production wages payable Sales tax payable Current portion, bank loan Long-term portion, bank loan Common stock Retained earnings Net sales Salaries expense Production wages expense Delivery wages expense Insurance expense Utilities expense Property tax expense Rent expense Total 2,400 8,709 2.112 28,000 90,000 30,306 134,784 92,500 32,742 5.280 4,500 4,284 4.800 1,500 355, 102 S 355,102 NOTE/R/ indicates cash receipts as recorded by the bookkeeper from Extvbt2: Dindicates cash disbursements es recorded by the bookkeeper fror Cash 127,365 228,635 (RI D 232,273 123,727 UTIB Accounts receivable , IRI 73.633 UTE 66.770 ASSETS Raw materials, as Raw materials, was 1,217 018 5,4200 e 12,582 10 11,70010) 13,799 UT/B 17,180 WTB Finished goods 12,429 O/B 12,429 UTE Work-in-process 1.2560B 1.250 UTE Prepaid insurance 1320018 1.320 UT Prepaid rent 1.500 DB 1.500 UT/B Raw materials, wicks 251 Ove 2,087 10 2,338 UTIB Olfice equipment 6.000018 6.000 UTAB Production equipment 4.600 OB 4,800 UTB Production supplies 400V 200 DI 326 UT 8 AD office equipment O/B 2,400 UTB 2400 A/D.prod equipment OVB 2.400 UTIE 2,400 Delivery van 14,000 14.000 UTB Rent expense 1,500.00 1,500JUT/B Insurance expenso 45000) 4.600 UTB EXPENSES Production wiges Salaries e perse expanse 92,500 101 32.7420 92,500 UT/B 32.742 UTE Delivery wages expone 5,28010 5,280 UTIB Property tax expense 4800 101 4 800 UTB Utos expense 4,2840 4,284 UT/B n Exhibit 2 LIABILITIES & EQUITY loan loan O/B 4,000 O/B 6,5120) UT/B 2.512 UT/B Sales tax payable O/B 895 IRI 20,218 29,822 D 8,709 UT/B 442 payable O/B UT/B 28,000 28,000 442 Accounts payable O/B 4,077 4,077 [0] UT/B 0 Income tax payable O/B 5.941 5,9410 UT/B 0 Common stock O/B 90,000 UT/B 90,000 Retained earnings O/B 30,306 UT/B 30,306 REVENUE Sales revenue [R] 134,784 UT/B 134,784