Perdues 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.

Footnotes:

1. (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. (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

Dec 15 Purchases 300 units for $48 per unit ($14,400 total) on account

Dec 20 Sells 500 units at $100 per unit on account - $50,000 total (FIFO inventory method is used for 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 PHCs accounting in 2021:

1. Record all regular journal entries and adjust journal entries. (15 Points) 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. (7.5 Points) (Note: Use T Accounts to assist)

3. Prepare Financial Statements as of 12/31/2021 for PHC (7.5 Points)

   1. Income Statement Multi-Step

   2. Statement of SH Equity

   3. Balance Sheet

November 30, 2021 Trial Balance - PHC Credit Debit 6,000 13,000 3,000 32,000 360,000 105,000 20,000 5,500 Account Cash Accounts Receivable Allowance for Uncollectible Accts Inventory (800 units at $40 cost/unit) Furniture, Fixtures & Equipment (FF&E) (1) Accumulated Depreciation - FF&E (1) Accounts Payable Interest Payable Income Tax Payable Notes Payable (2) Common Stock Retained Earnings Revenue Cost of Sales Salaries Expense Advertising Expense Rent Expense Depreciation Expense Interest Expense Bad Debt Expense Income Tax Expense Dividends Total 50,000 150,000 125,000 400,000 225,000 110,000 30,000 44,000 33,000 5,500 858,500 858,500 Tontonton November 30, 2021 Trial Balance - PHC Credit Debit 6,000 13,000 3,000 32,000 360,000 105,000 20,000 5,500 Account Cash Accounts Receivable Allowance for Uncollectible Accts Inventory (800 units at $40 cost/unit) Furniture, Fixtures & Equipment (FF&E) (1) Accumulated Depreciation - FF&E (1) Accounts Payable Interest Payable Income Tax Payable Notes Payable (2) Common Stock Retained Earnings Revenue Cost of Sales Salaries Expense Advertising Expense Rent Expense Depreciation Expense Interest Expense Bad Debt Expense Income Tax Expense Dividends Total 50,000 150,000 125,000 400,000 225,000 110,000 30,000 44,000 33,000 5,500 858,500 858,500 Tontonton