NATTIE CORPORATION

UNADJUSTED TRIAL BALANCE

DECEMBER $31,2020$

$)$

CASH

FV$-$NI Short Term INVESTMENTS

ACCOUNTS RECEIVABLE

ALLOWANCE FOR DOUBTFUL ACCOUNTS

INVENTORY

PREPAID INSURANCE

OFFICE BUILDING

ACCUMULATED DEPRECIATION $($OFFICE BUILDING$)$

OFFICE EQUIPMENT

ACCUMULATED DEPRECIATION $($OFFICE EQUIPMENT$)$

ACCOUNTS PAYABLE

WAGES PAYABLE

NOTES PAYABLE

PREFERRED STOCK, $30,000$ OUTSTANDING ON DECEMBER $31,2020$

COMMON STOCK, $160,000$ ISSUED and OUTSTANDING ON DEC $31,2020$

RETAINED EARNINGS, January $1$

SALES REVENUE

SALES DISCOUNTS

SALES RETURNS AND ALLOWANCES

PURCHASES

PURCHASES DISCOUNTS

TRANSPORTATION $-$ IN

WAGES EXPENSE

RENT EXPENSE

INSURANCE EXPENSE

SUPPLIES EXPENSE

Version $1$

Covers Appendix C$,$ Chapter $4$ and $5$

CREDIT

DEBITGAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY

ADVERTISING EXPENSE

OPERATING LOSS ON DISCONTINUED OPERATIONS

TELEPHONE EXPENSE

CASH DIVIDENDS DECLARED $-$Preferred Dividends

CASH DIVIDENDS DECLARED $-$Common Dividends

TOTAL

NOTE: All revenue, expense, gain and loss figures above are before tax.

This company uses a Periodic Inventory system.

The company follows ASPE

ADDITIONAL INFORMATION

Information for Adjusting Entries:

NAT'IIE Corp. uses the allowance method to record Bad Debts based on an est$$mate of $5\%$ of the Ending Accounts Receivable.

The Office Building is depreciated at $10\%$ of cost per year

The Office Equipment is depreciated straight line and has a residual value of $$6,000.$ It was purchased on May $1,2020$

and it is estimated to have a useful life of $5$ years.

FV$-$ NI Short term investments have a fair market value of $$32,300$ on December $31,2020.$ Investments need to

be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.

The Prepaid insurance includes : Policy A$,$ cost of $$12,700,$ three year term, paid in advance on April $1,2020$

AND Policy B$,$ cost of $$3,756,$ two year term paid in advance on June $1,2020.$

The company performed a year end physical count of its inventory as at December $31,2020.$

The amount of inventory on hand at December $31,2020$ amounted to $$415,700.$

Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.

A one year $6\%$ note payable of $$60,000$ was signed on August $31,2020.$Items affecting the Financial Statements $($do not record any adjusting entries; make the adjustment on the affected Financial Statement$)$

A$.$ There was an error that was discovered in prior years where last year's depreciation expense was overstated by $$120,000.$

B$.$ The Number of common shares outstanding at January $1$ was $110,000.$ On May $1,$ an additional $40,000$ were issued.

On November $1,$ another $10,000$ common share were issued.

C$.$ The Cash balance includes a $$18,000$ bank overdraft from another bank and a $16$ month investment of $$35,000.$

D$.$ The Accounts Receivable balance includes a credit balance in a customer's account equal to $$10,000.$

E$.$ The tax rate is $25\%$

REQUIRED:

Prepare the Adjusting Journal Entries required for the $2020$ fiscal year at December $31,2020($ITEMS $1-7$ ABOVE$)20$ marks

Prepare an adjusted Trial Balance $($Update Trial Balance with new accounts and new balances after the adjusting entries$)5$ marks

Prepare a multi$-$step Income Statement $(15$ marks$)$

Calculate Earnings per share and show the presentation on the Income Statement $(5$ marks$)$

Prepare a Statement of Retained Earnings $(5$ marks$)$

Prepare a Classified Balance Sheet $(20$ marks$)$

NOTE:

Prepare the Financial Statements after considering the above "Other Information"

$($ie must use adjusted Trial Balance AND items A to E$)$