M&M Snow Removal Ltd. is a residential and commercial snow removal company. M&M signs contracts with customers for snow removal services that start on November 1 and end on March 30. The company starts signing contracts in the month of September for the winter season. M&M has a year end on December 31 and had the following transactions involving current liabilities during the year: 1. 2. M&M signs contracts with customers and requests 100% of the contract price as a deposit at the time of signing. The company signed contracts for snow removal totaling $510,000. Based on past history, M&M estimates that one third (1/3) of the contract amount is earned by December 31. M&M has 10 employees, who are on standby in the event it snows. The employees earn gross wages of $125,000 for the year. From this, the company deducted 15% for income taxes, $4,500 in CPP premiums, and $2,500 in El premiums before distributing the pay cheques to the staff. As an employer, M&M was also required to match the employees' CPP premiums and pay $3,500 in El premiums. M&M had fallen behind in making payments owing to the government. The last 4 months of the year were still outstanding (that is, 4/12). M&M ordered salt and sand from suppliers for the upcoming season. The suppliers provided credit to M&M and at the end of the year, M&M owed $3,100 on total purchases of $7,800. M&M also sells service cards whereby a customer is not required to sign up for the season, instead the customer purchases a 5 or 10 snow removal service package to be used at the customer's discretion. The service packages cannot be carried over to the next season and expire on March 30. During the current winter session, the company sold $190,000 in service cards. As of December 31, none of the customers had used up the service cards, anticipating heavier snow fall in the January and February months. 3. 4. Prepare summary journal entries to record the transactions and any necessary adjusting journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry"for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 125.) Debit Credit No. Account Titles and Explanation 1. (To record Receipt) (To record Revenue) 2. to employees) (To record employer's liabilities) (To record payment to the government) 3. (To record purchase of supplies) (To record payment) 4. List of Accounts Prepare the current liabilities section of the statement of financial position as it would appear at the end of the year. (Round answers to decimal places, e.g. 125.) M&M Snow Removal Ltd. Statement of Financial Position $ $ $
