Peter Maxwell is the owner of the Maxwell shop, which is specialize in selling cars tires. The

shop has as October 31 st fiscal year end. It uses a perpetual inventory as a method of accounting

for inventory. On September 30th, 2021, the company had the following balances in its general

ledger:

During October, the last month of the fiscal year, the company had the following transactions:

Oct.

1

Paid $18,000 for Octobers rent in cash.

1

Building purchased for $100,000 with a 20-year estimated useful life and no scrap

value. The building has been available for use. For all fixed assets, the Maxwell

Ltd uses the straight-line depreciation method.

1

Office supplies purchased on account having cost of $9000

4

Sold 800 tyres on account to Hella Company with the price of $410 each, terms

2/9, n/30, FOB shipping point.

5

Sold equipment with an original cost of $65,000 for $20,000. The original

estimated useful life of it was 5 years with no scrap value and it had been used for

18 months.

5

Paid for the office supplies purchased on account on October 1 st .

10 Purchased 200 tyres on account from Orange Line Co., FOB destination, for

$56,000.

11 Paid to the supplier for the inventory purchased in September.

16 The product purchased by Hella Company was returned for a refund of $10,000.

The goods were returned to inventory at a cost of $5,000.

17 Paid salaries, $35,000 in cash.

19 Paid Orange Line Co. For half of the merchandise purchased on October 10 th .

21 Paid postage $1,000, Miscellaneous $500, Entertainment $400 in cash.

23 Hella Company paid the amount owing.

24 P. Maxwell took out $3,800 cash for personal use.

25 Collected $1,400 from past accounts receivable.

28 Paid $5,200 for advertising in cash.

30 Wrote off uncollectible account $3,700.Instructions:

(a) Create T-accounts for each of the above accounts and enter the October 1 st balances

(b) Prepare Journal entries for the October transactions

(c) Post the transactions (transfer from journal to the T-accounts)

(d) Prepare a Trial Balance at October 31st

(e) Journalize and post the following adjusting entries:

1. Four months of the 12-month insurance policy have expired on Oct 31st

2. The depreciation/amortization expense for the month as follows:

$11,700 for building, except for the new building purchased on Oct 1st

$6,400 for equipment.

$2,900 for patents

3. The note payable has an annual interest rate of 6,0%. Two months of interest have

accrued (added up) on October 31st .

4. On October 01, 2021, Maxwell purchased a 1-year bond for $500,000 that pays the

interest at 12% interest. The company will collect the principal and interest amounts

due at the end of the bonds term

5. Salaries accrued but not paid at October 31st total $40,000

6. The application of the aging method results in an estimated uncollectible accounts

receivable amount of $21,100.

(f) Prepare an Adjusted Trial Balance at October 31st .

(g) Prepare an Income Statement, Statement of Owners Equity, and Classified Balance Sheet

(Note: account balances in the T-accounts will change after step (e))

(h) Record and post-closing entries

(i) Prepare a post-closing trial balance on October 31