PADDIE CORPORATION Version $2$

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

DECEMBER $31,2020$

ACCOUNTS DEBIT CREDIT

CASH $136,960$

FV$-$NI Short Term INVESTMENTS $30,800$

ACCOUNTS RECEIVABLE $405,755$

ALLOWANCE FOR DOUBTFUL ACCOUNTS $6,400$

INVENTORY $403,091$

PREPAID INSURANCE $16,456$

OFFICE BUILDING $900,000$

ACCUMULATED DEPRECIATION $($OFFICE BUILDING$)300,000$

OFFICE EQUIPMENT $110,000$

ACCUMULATED DEPRECIATION $($OFFICE EQUIPMENT$)0$

ACCOUNTS PAYABLE $200,558$

SALARIES PAYABLE $9,782$

NOTES PAYABLE $60,000$

PREFERRED STOCK, $30,000$ OUTSTANDING ON DECEMBER $31,2020100,000$

COMMON STOCK, $140,000$ ISSUED and OUTSTANDING ON DEC $31,2020285,000$

RETAINED EARNINGS, January $1290,853$

SALES REVENUE $3,876,700$

SALES DISCOUNTS $20,571$

SALES RETURNS AND ALLOWANCES $51,259$

PURCHASES $2,575,724$

PURCHASES DISCOUNTS $35,678$

FREIGHT $-$ IN $25,635$

SALARIES EXPENSE $320,523$

RENT EXPENSE $40,955$

INSURANCE EXPENSE $0$

SUPPLIES EXPENSE $25,673$

GAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY $15,850$

ADVERTISING EXPENSE $18,860$

OPERATING LOSS ON DISCONTINUED OPERATIONS $22,009$

TELEPHONE EXPENSE $28,990$

CASH DIVIDENDS DECLARED $-$Preferred Dividends $27,560$

CASH DIVIDENDS DECLARED $-$Common Dividends $20,000$

TOTAL $5,180,8215,180,821$

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:

$1.$ PADDIE Corp. uses the allowance method to record Bad Debts based on an estimate of $4\%$ of the Accounts Receivable.

$2.$ The Office Building is depreciated at $8\%$ of cost per year

$3.$ The Office Equipment is depreciated straight line and has a residual value of $$8,000.$ It was purchased on August $1,2020$

and it is estimated to have a useful life of $4$ years.

$4.$ FV$-$ NI Short term investments have a fair market value of $$33,100$ 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,$ two year term, paid in advance on May $1,2020$

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

$6.$ 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 $$420,200.$

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

$7.$ A one year $5\%$ note payable of $$60,000$ was signed on October $1,2020.$

$8.$ There was an error that was discovered in prior years where last year$$s depreciation expense for the building was overstated by $$90,000.$

$9.$ The Number of common shares outstanding at January $1$ was $100,000.$ On March $1,$ an additional $30,000$ were issued.

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

$10.$ The Cash balance on the trial balance includes a $$15,000$ bank overdraft from another bank and a $2$ year investment of $$40,000.$

$11.$ The Accounts Receivable balance includes a credit balance in a customer$$s account equal to $$12,000.$

$12.$ The tax rate is $30\%$

$`$

REQUIRED:

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

$2.$ Prepare an adjusted Trial Balance $($Update the Trial Balance with new accounts and new ba