Normal Sans Interligne Titre 1 A COMPREHENSIVE ACCOUNTING CYCLE PROBLEMA Subjects Amber and Zack Wilson decide that they will create a new corporation, Canyon Cance Company. Canyon Cance Company is a service-based company that rents canoes for use on local lakes and rivers. The business began operations on December 1, 2018 The new business use the following accounts Cash Office Supplies Land Accumulated Depreciation - Building Utilities Payables Interest Payable Notes Payables Retained earning Income Summary Rent Expense Supplies Expense Depreciation Expense - Building Interest Expense Accounts Receivable Prepaid Insurance Building Accounts Payable Salaries Payables Unearned Revenue Common stock Dividends Service Revenue Salaries Expense Utilities Expense Telephone Payable Italique The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions Dec. 1 Received 5136,000 cash to begin the company and ined common stock to Amber and Zach 1 Amber and Zack contributed land on the river (worth 535,000) and a small building to use as a rental office (worth $35,000) in exchange for cash, 1 Prepaid $3,000 for three months rent on the warehouse where the company stores the capes 2 Purchased canoes igning a note payable for $7,200 4 Purchased office supplies on account for 1.200 Received 55.900 cash for canoe rentals to customers IS Rented canoes to customers for 56300, but will be paid next month 16 Received 3750 deposit from a coerental group that will use the chos next month 19 Pald verscounts payable, $500 20 Received built for the telephone (123) and times (295) which will be later. (use parte account payable) 31 Paid wager of ST.00 31 Paid cash divided to stockholders, 5300 ULACE Aabo Aabbed lili Dili lil IM III 5 Normal Sans intertigne Titre 1 Titre 2 Data for Adjusting Entries a. Office supplies on hand, S165 b. Rent of one month has been used. c. Determine the depreciation on the building using straight-line depreciation. Assume the useful life of the building is five years and the residual value is $5,000. d. $400 of uneared revenue has now been eamed. e. The employee who has been working the rental booth has earned $1,250 in wages that will be paid January 15, 2019. 1. Canyon Canoes has earned $1,850 of canoe rental revenue that has not been recorded or Italique red. g. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is so. h. Interest expense accrued on the notes payable, $50. It is estimated that the company is subject to a combined federal and state income tax rate of 20 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in January Instructions a. Perform the following steps of the accounting cycle for the month of December: 1. Journalize the December transactions. Do not record adjusting entries at this point 2. Post the December transactions to the appropriate ledger accounts. 3. Prepare the unadjusted trial balance columns of a 10-column worksheet for the year ended December 31- 4. Prepare the necessary adjusting entries for December 5. Post the December adjusting entries to the appropriate ledger accounts. 6. Complete the 10-column worksheet for the year ended December 31. b. Prepare an income statement and statement of retained earnings for the year ended December 31, and a balance sheet (in report form) as of December 31. c. Prepare required disclosures to accompany the December 31 financial statements. Your solution should include a separate noto addressing each of the following areas: (1) depreciation policy, (2) maturity datos of major liabilities d. Prepare dosing entries and post to ledger accounts. o. Prepare an after-closing trial balance as of December 31