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NATTIE CORPORATION

UNADJUSTED TRIAL BALANCE

DECEMBER 31, 2020

ACCOUNTS

DEBIT

CREDIT

CASH

96,868

FV-NI Short Term INVESTMENTS

30,300

ACCOUNTS RECEIVABLE

425,755

ALLOWANCE FOR DOUBTFUL ACCOUNTS

8,400

INVENTORY

402,912

PREPAID INSURANCE

16,456

OFFICE BUILDING

500,000

ACCUMULATED DEPRECIATION (OFFICE BUILDING)

0

OFFICE EQUIPMENT

120,000

ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT)

0

ACCOUNTS PAYABLE

205,258

WAGES PAYABLE

27,328

NOTES PAYABLE

60,000

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

100,000

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

185,000

RETAINED EARNINGS, January 1

280,623

SALES REVENUE

3,880,524

SALES DISCOUNTS

20,571

SALES RETURNS AND ALLOWANCES

51,259

PURCHASES

2,600,824

PURCHASES DISCOUNTS

35,678

TRANSPORTATION - IN

25,235

WAGES EXPENSE

320,523

RENT EXPENSE

40,955

INSURANCE EXPENSE

0

SUPPLIES EXPENSE

25,673

GAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY

13,650

ADVERTISING EXPENSE

18,860

OPERATING LOSS ON DISCONTINUED OPERATIONS

21,998

TELEPHONE EXPENSE

28,540

CASH DIVIDENDS DECLARED -Preferred Dividends

29,732

CASH DIVIDENDS DECLARED -Common Dividends

20,000

TOTAL

4,796,461

4,796,461

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:

1. NATTIE Corp. uses the allowance method to record Bad Debts based on an estimate of 5% of the Ending Accounts Receivable.

2. The Office Building is depreciated at 10% of cost per year

3. 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.

4. 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.

5. 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.

6. 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.

7. 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:

1. Need to Prepare the Adjusting Journal Entries required for the 2020 fiscal year at December 31, 2020 (ITEMS 1 - 7 ABOVE)

2. Need to Prepare an adjusted Trial Balance (Update Trial Balance with new accounts and new balances after the adjusting entries)

3. Need to Prepare a multi-step Income Statement

4. Need to Calculate Earnings per share and show the presentation on the Income Statement

5. Need to Prepare a Statement of Retained Earnings

6. Need to Prepare a Classified Balance Sheet

NOTE:

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

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