NATTIE CORPORATION Version $1$

UNADJUSTED TRIAL BALANCE Covers Appendix C$,$ Chapter $4$ and $5$

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 $31,2020100,000$

COMMON STOCK, $160,000$ ISSUED and OUTSTANDING ON DEC $31,2020185,000$

RETAINED EARNINGS, January $1280,623$

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 $4,796,4614,796,461$

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:

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

$2.$ Prepare an adjusted Trial Balance $($Update Trial Balance with new accounts and new balances after the adjusting entries$)5$ marks

$3.$ Prepare a multi$-$step Income Statement $(15$ marks$)$

$4.$ Calculate Earnings per share and show the presentation on the Income Statement $(5$ marks$)$

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

$6.$ 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