Perdue's Hockey Company (PHC) sells hockey skates and other equipment out of its retail store on Commonwealth Avenue in Newton, MA. PHC has the following November 30, 2021 Trial Balance listed below for the first 11 months of its fiscal 2021 operations. November 30, 2021 Trial Balance - PHC Account Debit Credit Cash 6,000 Accounts Receivable 13,000 Allowance for Uncollectible Accts 3,000 Inventory (800 units at $40 cost/unit) 32,000 Furniture, Fixtures & Equipment (FF&E) (1) 360,000 Accumulated Depreciation - FF&E (1) 105,000 Accounts Payable 20,000 Interest Payable 5,500 mees Income Tax Payable Notes Payable (2) 50,000 Common Stock 150,000 Netamico Retained Earnings 125,000 Revenue end 400,000 Cost of Sales 225,000 Salaries Expense 110,000 1 Advertising Expense 30,000 Auvesi Rent Expense 44,000 Depreciation Expense 33,000 Interest Expense w 5,500 Bad Debt Expense Income Tax Expense Dividends Total 858,500 858,500 Footnotes: (1) Furniture, Fixtures & Equipment for the shop was purchased on 1/1/19 and is being depreciated over 10 years, Straight-line method with no residual value. Note, 11 months of 2021 depreciation has already been expensed. (2) The $50k Notes Payable was issued on 1/1/21 and will only be fully due on 1/1/24. Interest and note will be paid on 1/1/24 (i.e., no payments until final maturity date). Interest rate is 12% annually. PHC has the following transactions during the month of December 2021: Dec 2 - Purchases 500 units for $42 per unit ($21,000 total) on account Dec 4 - Purchases 450 units for $44 per unit ($19,800 total) on account Dec 6 - Purchases 300 units for $46 per unit ($13,800 total) on account Dec 10 -Sells 1,500 units at $100 per unit on account - $150,000 total revenue (FIFO inventory method is used for cost purposes - Note: 2-part journal entry) Dec 12 - Receives cash of $100,000 from customers for prior sales on account Dec 14 - Pays $60,000 in cash for prior vendor purchases made on account cost purposes - Note: 2-part journal entry) Dec 26 - Receives cash of $71,000 from customers for prior sales on account Dec 26 - Pays $15,000 in cash for prior vendor purchases made on account Dec 28 - Write-off accounts receivable as uncollectible - $2,000 Dec 28 - Pay for employee salaries in cash - $25,000 Dec 30 - Pay for monthly rent in cash - $4,000 Dec 31 -Pay dividends to shareholders in cash, $5,000 PHC has the following adjusting entries which need to be recorded as well: 1. Uncollectible accounts are determined using an aging methodology. The company has determined that there are $5,000 of the total accounts receivable balance that are aged and should be reserved for at 50%. The balance of the accounts receivable is estimated to have 10% as uncollectible. Please prepare the appropriate adjusting journal entry for the Accounts Receivable allowance. (Hint: Use Accounts Receivable and Allowance for Uncollectible Accts T Account balances to calculate.) 2. The Furniture, Fixtures & Equipment was purchased 3 years ago and is being depreciated over 10 years on a straight-line basis with no residual value. PHC has recorded monthly depreciation expense during 2021, but has not recorded the entry for December 2021 depreciation and will need to make the adjusting entry accordingly. 3. PHC has a Notes Payable that has both the principal and interest due on 1/1/24. PHC has accrued the interest expense for the first 11 months of fiscal 2021, but has not yet recorded the entry for December 2021. Please record the December adjusting entry to recognize the interest expense. Note, the annual interest on the Notes Payable is 12%. 4. PHC estimates that accrued income taxes are $12,000 for 2021. Please make the appropriate adjusting entry. Please perform the following related to PHC's accounting in 2021: 1. Record all regular journal entries and adjusting journal entries. Note: All of the accounts used by PHC are listed in the opening Trial Balance, but Bad Debt Expense, Income Tax Expense, Income Tax Payable and Dividends are all at zero balances to start the month of December 2021. These accounts will be used in December 2021 journal entries. 2. Prepare an Adjusted Trial Balance as of 12/31/2021. (Note: Use T Accounts to assist) 3. Prepare Financial Statements as of 12/31/2021 for PHC Income Statement - Multi-Step b. Statement of SH Equity c. Balance Sheet a. Perdue's Hockey Company (PHC) sells hockey skates and other equipment out of its retail store on Commonwealth Avenue in Newton, MA. PHC has the following November 30, 2021 Trial Balance listed below for the first 11 months of its fiscal 2021 operations. November 30, 2021 Trial Balance - PHC Account Debit Credit Cash 6,000 Accounts Receivable 13,000 Allowance for Uncollectible Accts 3,000 Inventory (800 units at $40 cost/unit) 32,000 Furniture, Fixtures & Equipment (FF&E) (1) 360,000 Accumulated Depreciation - FF&E (1) 105,000 Accounts Payable 20,000 Interest Payable 5,500 mees Income Tax Payable Notes Payable (2) 50,000 Common Stock 150,000 Netamico Retained Earnings 125,000 Revenue end 400,000 Cost of Sales 225,000 Salaries Expense 110,000 1 Advertising Expense 30,000 Auvesi Rent Expense 44,000 Depreciation Expense 33,000 Interest Expense w 5,500 Bad Debt Expense Income Tax Expense Dividends Total 858,500 858,500 Footnotes: (1) Furniture, Fixtures & Equipment for the shop was purchased on 1/1/19 and is being depreciated over 10 years, Straight-line method with no residual value. Note, 11 months of 2021 depreciation has already been expensed. (2) The $50k Notes Payable was issued on 1/1/21 and will only be fully due on 1/1/24. Interest and note will be paid on 1/1/24 (i.e., no payments until final maturity date). Interest rate is 12% annually. PHC has the following transactions during the month of December 2021: Dec 2 - Purchases 500 units for $42 per unit ($21,000 total) on account Dec 4 - Purchases 450 units for $44 per unit ($19,800 total) on account Dec 6 - Purchases 300 units for $46 per unit ($13,800 total) on account Dec 10 -Sells 1,500 units at $100 per unit on account - $150,000 total revenue (FIFO inventory method is used for cost purposes - Note: 2-part journal entry) Dec 12 - Receives cash of $100,000 from customers for prior sales on account Dec 14 - Pays $60,000 in cash for prior vendor purchases made on account cost purposes - Note: 2-part journal entry) Dec 26 - Receives cash of $71,000 from customers for prior sales on account Dec 26 - Pays $15,000 in cash for prior vendor purchases made on account Dec 28 - Write-off accounts receivable as uncollectible - $2,000 Dec 28 - Pay for employee salaries in cash - $25,000 Dec 30 - Pay for monthly rent in cash - $4,000 Dec 31 -Pay dividends to shareholders in cash, $5,000 PHC has the following adjusting entries which need to be recorded as well: 1. Uncollectible accounts are determined using an aging methodology. The company has determined that there are $5,000 of the total accounts receivable balance that are aged and should be reserved for at 50%. The balance of the accounts receivable is estimated to have 10% as uncollectible. Please prepare the appropriate adjusting journal entry for the Accounts Receivable allowance. (Hint: Use Accounts Receivable and Allowance for Uncollectible Accts T Account balances to calculate.) 2. The Furniture, Fixtures & Equipment was purchased 3 years ago and is being depreciated over 10 years on a straight-line basis with no residual value. PHC has recorded monthly depreciation expense during 2021, but has not recorded the entry for December 2021 depreciation and will need to make the adjusting entry accordingly. 3. PHC has a Notes Payable that has both the principal and interest due on 1/1/24. PHC has accrued the interest expense for the first 11 months of fiscal 2021, but has not yet recorded the entry for December 2021. Please record the December adjusting entry to recognize the interest expense. Note, the annual interest on the Notes Payable is 12%. 4. PHC estimates that accrued income taxes are $12,000 for 2021. Please make the appropriate adjusting entry. Please perform the following related to PHC's accounting in 2021: 1. Record all regular journal entries and adjusting journal entries. Note: All of the accounts used by PHC are listed in the opening Trial Balance, but Bad Debt Expense, Income Tax Expense, Income Tax Payable and Dividends are all at zero balances to start the month of December 2021. These accounts will be used in December 2021 journal entries. 2. Prepare an Adjusted Trial Balance as of 12/31/2021. (Note: Use T Accounts to assist) 3. Prepare Financial Statements as of 12/31/2021 for PHC Income Statement - Multi-Step b. Statement of SH Equity c. Balance Sheet a
