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Munchies Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the

Munchies Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the request of the creditor holding the note payable. The companys post-closing trial balance at December 31, 2020, the end of its fiscal year, is presented below:

MUNCHIES Convenience Store LTD. Post-Closing Trial Balance December 31, 2020
Debit Credit
Cash $5,500
Accounts receivable 132,000
Allowance for doubtful accounts $8,800
Inventory 66,000
Estimated inventory returns 1,100
Prepaid insurance 13,200
Equipment 198,000
Accumulated depreciation 88,000
Accounts payable 74,800
Employee income tax payable 7,480
CPP payable 3,520
EI payable 1,320
Refund liability 3,300
Dividends payable 5,500
Notes payable (due 2023) 132,000
Common shares 55,000
Retained earnings 36,080
$415,800 $415,800

The company had the following transactions during January 2021. When recording these transactions, use the item number listed instead of the date. The company records adjusting entries on a monthly basis.

1. Paid off accounts payable of $60,500.
2. Purchased inventory costing $29,700 on credit.
3. Sold inventory that cost $33,000 on credit for $112,200. However, $2,200 of the amount sold is expected to be refunded due to returns and the cost of the inventory expected to be returned is $880.
4. Collected accounts receivable amounting to $119,900.
5. Wrote off $5,500 of uncollectible accounts receivable.
6. Received inventory returns from customers and reduced accounts receivable from these customers for $3,080. The inventory that these customers returned was in excellent condition and had a cost of $990.
7. Paid all salary-related liabilities outstanding at the beginning of January.
8. Paid salaries to employees, who earned a total of $44,000 of gross pay less employee income tax, CPP, and EI of $7,920, $2,244, and $713, respectively. Withholdings will be remitted in February.
9. Recorded employee benefits expense relating to the employers share of CPP of $2,244 and EI of $998.
10. Paid rent of $9,900.
11. Paid dividends owing on payment date at the beginning of the month.
12. Expired $1,100 of prepaid insurance.
13. Paid monthly interest on the 4%, $132,000 note payable.
14. Sold equipment at the end of January for $15,400 cash. The equipment had a cost of $22,000 and a carrying amount of $13,200.
15. Purchased new equipment at the end of the month costing $11,000 by issuing common shares.
16. Incurred depreciation on equipment on a straight-line basis. The equipment has a useful life of six years and no residual value.
17. Estimated at the end of January that $4,620 of accounts receivable was uncollectible.
18. Estimated that income tax incurred in January amounted to $4,400. This amount will be paid next month.

(a)

Prepare T accounts and enter the December 31 balances.

Cash

Dec. 31 Bal. Dec. 31 Bal.

Accounts Receivable

Dec. 31 Bal. Dec. 31 Bal.

Allowance for Doubtful Accounts

Dec. 31 Bal. Dec. 31 Bal.

Inventory

Dec. 31 Bal. Dec. 31 Bal.

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