PLEASE READ THROUGH CAREFULLY:

It is now January 2023. CP needs to prepare its financial statements for the year ending December 31, 2022. You have obtained the following information about the transactions that occurred during the 2022 fiscal year: I. On January 15, 2022, CP sold $15,000 of its 2021 inventory for $20,000. On the same date, CP identified that the remaining inventory was contaminated with salt water and this inventory was discarded at no cost to CP. II. Sales of oil and gas-related products were $1,300,225 (including the sales on January 15, 2022). CP sells all its products on credit with terms of net 30 (i.e. payment is due to CP from its customer in 30 days after goods and services are delivered to the customer). III. CP purchased $300,000 worth of supplies for its operations during the year. All purchases were on credit. At the end of 2022, CP hadn't been billed for an additional $5,000 of supplies that it purchased. IV. CP incurred maintenance costs on its various oil rigs of $75,000 during 2022. At the end of 2022, CP owed technicians $16,000. (The $16,000 owed is included in the $75,000). V. CP paid wages and bonuses of $600,000 to employees. On December 31, 2022, CP owed employees an additional $50,000. VI. During the year, CP collected $1,275,000 from customers. VII. CP paid its suppliers $250,000 in 2022. VIII. During the year, CP paid the taxes it owed at the end of 2021. It also paid $11,000 in installments on its 2022 income taxes. It is estimated that CP owes an additional $12,000 in income taxes for 2022. IX. The customer deposits reported on the 2021 balance sheet pertaining to customers who were perceived to be high risk to which CP wasn't prepared to offer credit. These customers were required to give deposits against products to be delivered during 2022. These customers were delivered products during 2022 in excess of the amount of the deposits. CP decided in 2022 to offer credit to these customers. The deposits are not included in the other revenue recognized in the year. X. Members of the Bell family sometimes used CP employees for personal work at their homes and cottages to repair their heating and cooling equipment or repair their decks and patios. Usually, the work was done on weekends and the employees were paid at overtime rates. CP pays the employees' wages for the work done for the family members and accounts for the cost as a wage expense. The wages paid for work done on behalf of the Bell family members was $31,000. XI. During 2022, CP purchased new equipment for $128,000 in cash. XII. Depreciation expense for 2022 was $96,000. XIII. Prepaid insurance pertains to insurance on its equipment and buildings. During 2022, CP used $30,000 of insurance that was recorded as prepaid on December 31, 2021. In late 2022, it purchased and paid for additional insurance for 2023 and beyond. The insurance costs $31,000.

XIV. During the year, CP paid $17,000 in interest to the holders of the long-term debt. Interest is paid annually on January 2. In addition to the interest payment, CP paid $20,000 on January 1, 2022 to reduce the balance owed on the long- term debt. The interest rate on the notes is 8.5%. XV. CP paid $75,000 in cash for other expenses related to operating the business in fiscal 2022. XVI. CP paid dividends of $155,000 to shareholders. XVII. During 2022, CP issued new common shares for $20,000. This cash will be used to purchase new equipment in 2023. XVIII. (Bonus) On December 25, 2022, CP experienced an oil spill at one of its oil and gas sites. The spill occurred due to severe weather conditions. CP paid $100,000 to remediate the oil spill and return the site to its original condition

BASED ON THIS INFO ANSWER THESE 3 QUESTIONS SHOWING FULL WORKINGS:

1. Prepare all necessary transactional journal entries for the year-ended December 31, 2022. Providing a description for each entry is optional. 2. Prepare a trial balance as of December 31, 2022. 3. Prepare a balance sheet for CP as of December 31, 2022, and an income statement and statement of retained earnings for the year ended December 31, 2022.

THANK YOU!

Canadian Petroleum Inc. (CP) is a small Oil and Gas producer company that has petroleum production and supply operations in Alberta, Canada. The Bell family of Calgary, Alberta owns CP, but professional managers manage the business. One member of the Bell family serves as the chair of the board of directors. No other family members are actively involved with Bell. CP's balance sheet for December 31, 2021, the company's year-end, is shown below. CP uses its financial statements for tax purposes. It also provides its financial statements to its lenders to demonstrate its financial position each year and its ability to service its debts. The funds from the lenders have been used to purchase drilling equipment to expand operations in the oil sands region of Alberta. Canadian Petroleum Inc. Balance Sheet As at December 31, 2021