Please post adjusting journal entries to the worksheet. Unadjusted trial balance is pictured.

Ozark closes to customers from Christmas until January 2. Employees do work counting inventory, doing maintenance, and cleaning. The following information pertains to potential year-end adjusting entries. If needed, the applicable federal income tax rate for prior and the current year is 30%.

1. Depreciation is taken. Assets sold are depreciated through the month of sales. (Note: Depreciation on the Trucks for the year should be $12,000 in addition to the $5,000 applicable to the truck sold in Dec.). The depreciation on the building has been based on a 30-year life. It is now estimated that the life used for the building should have been 40 total years. The change in estimate will be incorporated into the current year depreciation calculation. Hint: You can calculate the building has been depreciated for 10 prior years. That would have meant 20 years remained. Now, you will divide what is left to depreciate the remaining cost over 10 more, or 30 total years. There is never an adjustment for prior periods.

2. Major expenditures to improve existing assets are debited to the appropriate asset account as was done in entry 29 on Dec. 24. Because the expenditure was at the end of the year, there is no added depreciation on the improvement.

3. Property insurance is allocated over the 12 month period covered by the premium (see Dec. 10, entry 24)

4. A physical inventory was taken of piers and lifts. This was done to confirm the perpetual inventory amount. You uncovered the following information: (a) A lift was listed in the inventory records, but could not be found. It was determined that it had been sold during the current year and had not been included in the cost of goods sold. The cost of the lift was $2,200. You need to remove this lift from inventory and charge it to the cost goods sold. (b) A lift was purchased by Ozark and was shipped by the manufacturer to Ozark FOB Shipping Point (ownership transfers to buyer at sellers loading dock)). It had an invoice of $5,300. This lift has to be added to inventory and accounts payable. (c) It was also determined that some lifts in the inventory were obsolete and they were written down by $2,000. This loss will appear as a separate other expense on the income statement. (Number your adjustments, 4a, etc.)

5. An analysis of the deferred revenue on the books revealed that it was for rentals made for ski rentals for January March of the current year (2016). It had been accrued last Dec. 31, 2015. Sales tax was collected in 2015 at the time of the ski rental. Hint: This deferred revenue has been earned and should be added to the appropriate revenue account.

6. An aging schedule is to be done to establish the allowance for bad debts: The allowance should be:

Age	Amount	Percentage
0-30 days	$30,000	1%
30-60 days	10,000	5%
Over 60 days	Balance	20%

7. A physical inventory was taken of the 510, supplies account, the December 31, 2016 balance was $1,700.

8. A physical inventory was taken of account 505, Inventory, sports equipment. The agreed upon value using LIFO was $27,000. Remember, this inventory is recorded under the periodic method. At this point, you should make entries to arrive at the cost of goods sold. Freight is to be added to purchases to get cost delivered to Ozark. Purchase discounts should be subtracted. Always build the cost of goods available to sell. Then deduct ending inventory to arrive at cost of goods sold.

9. The law suit involves a suit by a customer concerning damage to a boat caused by a boat lift. Your lawyer thinks that you will have to pay damages and the estimate is $7,000.

10. As of Dec. 31, 2016, accrued salaries are $3,000 and accrued labor wages are $9,000. Dont forget added employer paid tax for FICA and Medicare and as 10% income tax withholding. Rather than creating new accrual accounts, you may use the usual payroll and tax payable accounts. This will not create a problem since this entry will be reversed on January 1, 2017. Remember to round up payroll taxes to the nearest dollar.

11. Dock lumber in the amount of $700 was purchased on account in December and was returned for a credit. The lumber company canceled the bill (which had not yet been paid)

12. Advertising in the amount of $1,200 was paid and recorded as an expense in January, but the ad was run in December of 2015.The income tax rate applicable to 2015 was 30%. Hint: This is a prior period adjustment that will be separately recorded and later closed to retained earnings.

13. The estimated value of the tools remaining at 2016 year-end is $7,000. The appraisal method of depreciation is used (see information on page 4 for account # 537).

14. Interest is paid quarterly on the $120,000, 6% note payable (under the line of credit). The note is due on May 1, 2017. Interest was last paid on November 1. Hint; You need to accrue interest for 2 months that would be 2/12 of 6% annual interest amount.

15. It has been determined that $4,000 property taxes paid in 2016 were applicable to 2017, not 2016.

16. The $12,000 of sports equipment rental revenue collected in December (entry 36) is for the use of equipment during December through March and it should be pro-rated equally over the four months. The pro-ration is the same, no matter when the rental contract is executed.

17. The exchange rate on Dec. 31 is One Euro = $1.35 (refer back to Dec. 24, #17)

18. An adjustment is need for prepaid computer consulting services (Dec. 24, item 37)

19. Installment contracts payable principal payments on truck loan are $10,035 in 2017. These amounts do not require an entry, but the information will be needed for the formal balance sheet (Requirement 3).

20. The market value of the trading investments is $15,000. The adjustment to market should be a valuation account just below the investment account.

T The applicable income tax rate is 30%. The adjustment for income tax expense cannot be made until you have calculated income before tax on the worksheet. Thus, no entry is made at this point. Be sure that you do not include the provision for income taxes in the amounts summed to calculate income before taxes. (Otherwise you would calculate tax on income that is already net of tax.)

Trial balance Unadjusted 12/31/16 Trial Balance Adjustments Debit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Retained Earnings Debit Credit Balance Sheet Debit Credit Credit 403 Unadjusted Trial Balance Number Debit Credit 401 27,826 402 204,992 77.425 404 1,793 405 8,000 12.000 4061 - 501 105,000 503 2,260 505 25.000 510 1,800 511 1,000 512 2,000 Cash-checking Cash-money market account Accounts receivable Allowance for bad debts Rebate receivable Trading investments Adjustment to fair value Inventory, piers and lifts Inventory, dock parts Inventory, sports equipment Supplies Pre-paid expense Security deposit 406 120,000 450,000 150,000 75,000 26.000 Land Buildings Accumulated depreciation - buildings Barge Accumulated depreciation - barge Trucks Accumulated depreciation - Trucks Tools Customer deposits Accounts payable 520 530 531 532 533 534 535 537 600 601 120,000 26,000 9,200 4,000 75,900 Wages payable 602 FICA and Medicare Payable 603 Payroll tax withholdings 604 State sales tax payable Federal income taxes payable 605 606 1,600 607 608 6091 6092 620 4,000 4.300 120,000 269,000 50,000 Estimated liabilities Accrued interest payable (year end adjustme Deferred revenue Gift certifcate outstanding Note payable, Line of credit, 6% annual rate Mortgage payable. 6% annual rate Installment contracts payable Deferred sport rental income Common stock, si par Paid-in excess of par Retained earnings Dividends declared Prior period adjustment Pier and lift sales Pier and lift installation labor Custom dock sales 611 612 613 700 701 702 703 704 101 102 103 10,000 190,000 158,791 10,000 956,000 168.800 297,000 Seawall installations Sports equipment sales Sports equipment rentals Permit fees revenue Interest revenue Gain/loss on sale of fixed assets Unrealized gain/loss on investments Cost of sales - Piers and lifts Dock parts costs Seawall costs Sports Eq. cost of goods sold (year end only 104 105 106 107 109 110 203,500 109,500 43,500 4,800 1,900 2,350 111 201 203 204 205 693,000 187,840 105,300 206 87,700 210 4,060 320 Sports goods purchases purchases Purchase discounts taken Salaries expense Labor expense Payroll tax expense Utilities expense Insurance expense Maintenance expense Fuel expense Property tax expense Advertising expense Supplies expense Professional fees expense Freight in Interest expense Bad debt expense Depreciation expense - building Depreciation expense - barge Depreciation expense - trucks Depreciation expense - tools Inventory write-down Exchange gain/loss Estimated losses Income tax expense Totals Net income before tax 311 107.000 312 224,000 313 25,323 314 20,400 315 40.200 316 16.900 317 6,300 318 12.000 319 38.800 12.900 321 9,795 322 5,600 323 28.190 324 5,043 331 333 - 335 5,000 337 - 340 341 350 399 2.882,794 2,882,794 Net income Retained earnings, Dec. 31, 2016 Trial balance Unadjusted 12/31/16 Trial Balance Adjustments Debit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Retained Earnings Debit Credit Balance Sheet Debit Credit Credit 403 Unadjusted Trial Balance Number Debit Credit 401 27,826 402 204,992 77.425 404 1,793 405 8,000 12.000 4061 - 501 105,000 503 2,260 505 25.000 510 1,800 511 1,000 512 2,000 Cash-checking Cash-money market account Accounts receivable Allowance for bad debts Rebate receivable Trading investments Adjustment to fair value Inventory, piers and lifts Inventory, dock parts Inventory, sports equipment Supplies Pre-paid expense Security deposit 406 120,000 450,000 150,000 75,000 26.000 Land Buildings Accumulated depreciation - buildings Barge Accumulated depreciation - barge Trucks Accumulated depreciation - Trucks Tools Customer deposits Accounts payable 520 530 531 532 533 534 535 537 600 601 120,000 26,000 9,200 4,000 75,900 Wages payable 602 FICA and Medicare Payable 603 Payroll tax withholdings 604 State sales tax payable Federal income taxes payable 605 606 1,600 607 608 6091 6092 620 4,000 4.300 120,000 269,000 50,000 Estimated liabilities Accrued interest payable (year end adjustme Deferred revenue Gift certifcate outstanding Note payable, Line of credit, 6% annual rate Mortgage payable. 6% annual rate Installment contracts payable Deferred sport rental income Common stock, si par Paid-in excess of par Retained earnings Dividends declared Prior period adjustment Pier and lift sales Pier and lift installation labor Custom dock sales 611 612 613 700 701 702 703 704 101 102 103 10,000 190,000 158,791 10,000 956,000 168.800 297,000 Seawall installations Sports equipment sales Sports equipment rentals Permit fees revenue Interest revenue Gain/loss on sale of fixed assets Unrealized gain/loss on investments Cost of sales - Piers and lifts Dock parts costs Seawall costs Sports Eq. cost of goods sold (year end only 104 105 106 107 109 110 203,500 109,500 43,500 4,800 1,900 2,350 111 201 203 204 205 693,000 187,840 105,300 206 87,700 210 4,060 320 Sports goods purchases purchases Purchase discounts taken Salaries expense Labor expense Payroll tax expense Utilities expense Insurance expense Maintenance expense Fuel expense Property tax expense Advertising expense Supplies expense Professional fees expense Freight in Interest expense Bad debt expense Depreciation expense - building Depreciation expense - barge Depreciation expense - trucks Depreciation expense - tools Inventory write-down Exchange gain/loss Estimated losses Income tax expense Totals Net income before tax 311 107.000 312 224,000 313 25,323 314 20,400 315 40.200 316 16.900 317 6,300 318 12.000 319 38.800 12.900 321 9,795 322 5,600 323 28.190 324 5,043 331 333 - 335 5,000 337 - 340 341 350 399 2.882,794 2,882,794 Net income Retained earnings, Dec. 31, 2016