Part 1 - Adjusting Journal Entries and Financial Statements: Falcon Corporation ("Falcon") sells designer backpacks with logos of various college and university teams and organizations. Falcon started its business on January 1, 2017. Falcon ran its operations for the calendar year 2019 and its accountant, Flex, compiled an unadjusted trial balance of account information as of December 31, 2019 (see materials below - Unadjusted Trial Balance information) In order to complete Falcon's 2019 financial results, Flex needs to adjust these trial balance numbers by preparing any adjusting journal entries that are needed when he prepares Falcon's books and financial statements for the year-end Board of Directors' meeting. Flex has received information from discussions with department managers and various materials he has gathered (see materials below - Business Information List). Flex's mission is as follows (and he needs your assistance): A. For each item on the Business Information List, determine the following: Does a transaction exist? . If "YES," prepare the adjusting journal entry Flex would need to record for Falcon at December 31, 2019. . If "NO," write "no transaction" and explain why there is no adjusting journal entry to record at December 31, 2019. B. Post the adjusting journal entries to T Accounts and create an Adjusted Trial Balance in good form. C. Prepare the following financial statements, (in good form) from the adjusted Trial Balance. Classified Balance Sheet Classified Income Statement Statement of Stockholders' Equity D. Prepare the closing adjusting journal entries for Falcon at December 31, 2019. UNADJUSTED TRIAL BALANCE INFORMATION: Unadjusted Trial Balance Information At December 31, 2019 in Whale US Dollars 200 Accounts receivable Accounts payable Accumulated depreciation equipment Advertising expense Alowme for double Baddest Expense 297.000 130000 3450 Common stock Cost of goods sold Deprecation expense Equipment-cost om 10000 Income tax expense Income tax payable Interest expense Interest income Interest payable 27.000 145.000 Legal expense Lagal payable Nato pay . Due December 1, 2021 Notes payable Due June 1, 2020 Prepaid insurance Prepaid rent Rent expense Retained earing beginning of year Scary expense Salanes payable Sales discounts Sales returns and allowances Sales severe Supplies Sinds CCTS Uneamed revenue Untities expense Units payable 72000 4000 BUSINESS INFORMATION LIST (assume all prier journal entries were recorded correctly): 1. Falcon did not receive its bill for the month of December 2019 from its law firm. Flex estimated that the bill would arrive in January 2020 and total $20,000 per month 2. Falcon signed a contract with a customer, Ohio State for Buckeye backpacks for the 2020-2021 school year for $30,000. The contract was signed on December 3, 2019, but delivery of the backpacks will not occur until April 2020. 3. Falcon entered into an agreement on July 1, 2019 with a customer, Michigan for backpacks to give away to sports fans in the fall. Michigan paid Falcon the full contract value of $20,000 when the contract was signed. Flex noticed that the backpacks were delivered to Michigan and the related inventory entry was made, however, the matching revenue was not recorded. 4. Falcon rented a truck to park at Bentley football games in the fall and market its backpacks with logos to sports fans. The truck rental was for the months of September 2019 through January 2020 for a total of $5,000, which Falcon paid in September. 5. Flex counted the supplies left in the supply closet and found that $1,000 of supplies were left as of the end of the year. 6. Falcon paid and recorded its annual corporate liability insurance policy for $27,000 on November 1, 2019 to Safety Insurance. This is the only insurance Falcon has and the amount they paid is shown on the unadjusted trial balance. 7. Falcon purchased a logo printing machine on April 1, 2019 for $65,000. Flex noticed that depreciation was never recorded during 2019. The logo printing machine has an estimated life of 5 years and a salvage value of $5,000. 8. Falcon pays its employees S100,000 per week on every Friday for the current five day work week. Flex looked at the calendar and saw that December 31, 2019 was on a Tuesday. 9. Falcon did not receive its utility bill for the month of December. Flex looked at the historical amounts and the utility bill averages $1,000 per month. 10. Falcon called its backpack supplier, Dora, Inc. and ordered S50,000 of backpacks. Dora said with the holiday rush, she would not be able to ship the backpacks until January 7, 2020. 11. Falcon's note payable incurs interest at a 9% annual rate. Falcon entered into its two notes payable agreements on August 1, 2019. Interest is payable on the respective due dates of each notes payable. No interest expense has been recorded for 2019. 12. Flex estimates the income tax expense for Falcon was $20,000 and this was not yet recorded for 2019. 13. Falcon had an arrangement with a customer, Wildcat, Inc. ("Wildcat") who received payment terms of 2/10, net 30. On December 28, 2019, Falcon sold S10,000 of backpacks to Wildcat, which was recorded. Wildcat informed Falcon that the company intended to pay within 10 days. BUSINESS INFORMATION LIST (continued) 14. Flex forgot to record a backpack sale on account of $20,000 to customer, University of NH and related inventory entry of $12,000 sold on December 30, 2019. 15. Flex realized that . .. expense estimate. 8. Falcon pays its employees $100,000 per week on every Friday for the current five day work week. Flex looked at the calendar and saw that December 31, 2019 was on a Tuesday. 9. Falcon did not receive its utility bill for the month of December. Flex looked at the historical amounts and the utility bill averages $1.000 per month. 10. Falcon called its backpack supplier, Dora, Inc. and ordered $50,000 of backpacks. Dora said with the holiday rush, she would not be able to ship the backpacks until January 7, 2020. 11. Falcon's note payable incurs interest at a 9% annual rate. Falcon entered into its two notes payable agreements on August 1, 2019. Interest is payable on the respective due dates of each notes payable. No interest expense has been recorded for 2019. 12. Flex estimates the income tax expense for Falcon was $20,000 and this was not yet recorded for 2019. 13. Falcon had an arrangement with a customer, Wildcat, Inc. ("Wildcat") who received payment terms of 2/10, net 30. On December 28, 2019, Falcon sold $10,000 of backpacks to Wildcat, which was recorded. Wildcat informed Falcon that the company intended to pay within 10 days. BUSINESS INFORMATION LIST (continued) 14. Flex forgot to record a backpack sale on account of $20,000 to customer, University of NH and related inventory entry of $12,000 sold on December 30, 2019. 15. Flex realized that he needed to revise his bad debt expense estimate Falcon uses the Aging of Accounts Receivable method of computing its bad debt expense estimate. Credit sales for the year are $620,000 and the AR Aging Report is as follows: ARBA Duo 30 Days De Bo Days De Days DueDay Estimated uncollectible amounts per aging category are as follows: o Due 30 Days = 3% o Due 60 Days = 4% o Due 90 Days - 5% o Due 91+ Days = 10% STED TRIAL BALANCE INFORMATION: Falcon Corporation Unadjusted Trial Balance Information At: December 31, 2019 pom 30000 8.000 In Whole US Dollars Unad usted Account Debit Accounts receivable $ 280.000 Accounts payable Accumulated depreciation - equipment Advertising expense 27,000 Allowance for doubtful accounts Bad debt Expense 14.000 Cich 397000 Common stock Cost of goods sold 325.000 Depeciation expense 15.000 Equipment -cost 300.000 Insurance expense 10,000 Income tax expense 10.000 Income tax payable Interest expense 3.000 Interest income Interest payable Inventory 49,000 Logal expense Legal payable Notes payable. Due December 1, 2021 Notes payable. Due June 1, 2020 Prepaid insurance 27.000 Prepaid rent 5.000 Rent expense 800m Retained earnings, beginning of year Salary expense 125.000 Salaries payable Sales discounts Sales retums and allowances 35.000 Sales revenue Supplies 4000 Supplies expense Uneamed revenue Utilities expense 10,000 Utilities payable Total $ 1.687.000 $ 2000 3.000 100.000 200.000 145.000 73.000 800000 75.000 187000 SINFORMATION LIST (assume all prior journa ded correctly): lid not receive its bill for the month of December 20 1 Flex estimated that the bill would arrive in Januar onth