Please Record the 11 adjusting journal entries based on the information given below. CMC uses a perpetual inventory system which means that when they record the sale of a product (at the selling price), they also update COGS and Inventory (at cost). Recommendation: use cell referencing when posting to the Trial Balance to eliminate potential typos and follow-through errors. Additional Information to use in recording the necessary Adjusting Journal Entries (AJEs): 1. As of December 31st, wages of $45,700 should be accrued; associated payroll taxes on these wages are $2,910. (Record in two separate adjusting entries. The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.) 2. The Unearned Consulting Revenue account has a balance before adjustment of $261,220 as of December 31, 20x1. Of this balance, 70% of the work was completed by year end. 3. You discover that a sale of a product was made on account and CMC recorded the sale in December for $136,200. However, the product has not yet been shipped, therefore it is not considered to be delivered to the customer. The cost of the product was 55% of its selling price. CMC uses the perpetual inventory method.

4. At year-end, the CFO asks you to review the Accounts Receivables to determine if there are any customer accounts that should be written off as uncollectible. Based on your review, you determine that the Account Receivable from Shift, Co. has been past due for over 14 months and Shift recently declared bankruptcy. The CFO instructs you to write off the account balance of $21,350. Directly following this action, you can now record bad debt expense which is estimated to be 5% of ending Accounts Receivable. (Round to the nearest whole dollar.) 5. CMC prepays for its property & casualty insurance. As of December 31, 20x1, 80% of the prepayments have now been consumed. (Round to the nearest whole dollar.) 6. CMC records depreciation and amortization expense annually. They do not use an accumulated amortization account. (i.e. Amortization Expense is recorded with a debit to Amort. Exp and a credit to the Patent.) Annual depreciation rates are 5% for Buildings/Equipment/Furniture, no salvage. (Round to the nearest whole dollar.) Annual Amortization rates are 10% of original cost, straight-line method, no salvage. CMC owns two patents: Patent #FJ101 has an original cost of $154,000 and Patent #CQ510 was acquired for $169,000. The last time depreciation & amortization were recorded was December 31, 20x0. 7. The long-term liabilities were outstanding for all of 20x1 and accrue interest at 8% APR. CMC records accrued interest quarterly (interest was last updated on Sept. 30.) The company is required to pay the interest annually each January 1st. 8. CMC often allows customers to finance the purchase of their products through long-term lending agreements and therefore reports Long-term Notes Receivable on their Balance Sheet. These notes are interest bearing and earn CMC interest revenue. The notes accrue interest at 8% APR and were outstanding for all of 20x1. Interest is payable to CMC each January 1st. 9. On December 15, CMC declared a dividend of $220,000, to be paid on January 20, 20x2. The dividend declaration had not yet been recorded. 10. At December 31, the Long-Term Investments (Available-for-sale securities or AFS) had a fair value of $195,400. The AFS Investment was originally purchased on June 1, 20x1 for $160,500. CMC uses a Fair Value Adjustment account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. (e.g. If the fair value of the Investment has increased at year end, debit the Fair Value Adjustment account in order to increase the Carrying Value of the asset to equal its fair value on the balance sheet at Dec. 31st. This is an unrealized (holding) gain, which would require a credit to record it.) 11. CMCs Income tax rate for 20x1 was determined to be 21%. Helpful info given: 1. The debit and credit columns of your AJEs should total to: $ 1,060,258 2. The Trial Balance After Adjustment (Columns H & J) should both total to: $15,370,967 If you get both of these check figures, this indicates that you will correctly report Net Income, your Balance Sheet will be correct, as well as your Stockholders Equity balances. To correctly record AJE #4 for Bad Debt Expense, you must first post the AJE #3 to your Trial Balance as well as the write off of the account receivable from Shift Company.

A B D 1 General Ledger Account Name Trial Balance Before Adj 12/31/x1 2 Debit Credit 3 Cash and cash equivalents 92,063 4 Accounts Receivable 913,780 5 Allowance for doubtful accounts 29,462 6 Interest Receivable 3,500 7. Inventory 1,270,160 8 Prepaid expenses 26,774 9 Other Current Assets 16,063 10 Investments 160,500 11 Fair Value Adjustment 0 0 12 Notes Receivable 220,000 13 Building 876,418 14 Equipment and furniture 332,983 15 Land 348,791 16 Accum Depr 656,465 17 Goodwill 493,951 18 Patents 217,000 19 Accounts Payable 1,169,343 20 Dividends payable 21 Interest payable 42,102 22 Unearned Consulting Revenue 261,220 23 Wages payable 81,350 24 Payroll taxes payable 8,850 25 Income tax payable 26 Long term liabilities 701,700 27 Common Stock 920,000 28 Paid-in capital common stock 105,000 29 Treasury Stock 400,000 30 Retained Earnings 539,069 31 Dividends 32 Accum Other Comprehensive Income 0 0 33 Sales revenue 9,253,346 34 Service revenue 1,169,385 35 Interest Revenue 0 36 Sales returns 162,400 37 Sales discounts 269,662 38 Product cost of goods sold 5,384,590 39 Service cost of goods sold 570,811 40 Advertising Expense 159,080 41 Bad debt expense 0 42 Depreciation and amortization 0 43 Professional Dues & subscriptions 21,470 44 Gain/loss on disposal 4,790 45 Income tax expense 0 45 Income tax expense 46 Insurance Expense 47 Interest expense 48 Legal and accounting fees 49 Miscellaneous 50 Office expense 51 Payroll taxes 52 Property taxes 53 Repair and maintenance 54 Research and development 55 Telephone 56 Travel and entertainment 57 Utilities Expense 58 Wage Expense 59 Salaries - Officers 60 Income Summary 61 Unrealized Gain/Loss-AFS 62 0 80,144 42,102 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 0 0 14,937,292 0 0 14,937,292 H 1 J K December 31, 20x0 $120,670 516,454 (24,975) 795,960 3,500 14,574 8,879 1,435,062 0 0 0 48,000 A B D E F G 1 CM Corporation 2 Balance Sheet 3 for the periods ended 4 December 31, 20x1 5 6 Assets 7 8 Current assets 9 Cash and cash equivalents $92,063 10 Accounts receivable 756,230 11 Allowance for doubtful accounts (29,462) 12 Inventory 1,270,160 13 Interest Receivable 3,500 14 Prepaid expenses 26,774 15 Other current assets 16,063 16 Total current assets 2,135,328 17 Long-Term Investments 18 Investments 160,500 19 +/-Fair Value Adjustment 0 160,500 20 Notes Receivable 000 21 22 Property, plant and equipment 1,558,192 23 Accumulated depreciation (656,465) 24 Net fixed assets 901,727 25 26 Other Assets 27 Goodwill 493,951 28 Patents 217,000 29 710,951 30 31 Total assets $4,128,506 32 33 34 Liabilities and Stockholders' Equity 35 36 Current liabilities 37 Accounts payable $1,169,343 38 Dividends payable 0 39 Unearned revenue 261,220 40 Interest payable 41 Wages payable 81,350 42 Payroll taxes payable 8,850 43 Income taxes payable 0 44 Total current liabilities 1,562,865 1,200,255 (591,965) 608,290 98,440 98,000 196,440 $2,287,792 42,102 $315,395 48,000 108,220 6,500 78,200 9,033 279,850 845,198 1 $315,395 48,000 108,220 6,500 78,200 9,033 279,850 1,562,865 845,198 701,700 278,525 35 36 Current liabilities 37 Accounts payable $1,169,343 38 Dividends payable 0 39 Unearned revenue 261,220 40 Interest payable 42,102 41 Wages payable 81,350 42 Payroll taxes payable 8,850 43 Income taxes payable 0 44 Total current liabilities 45 46 Long-term liabilities 47 48 Stockholders' equity 49 Contributed capital 50 Common stock, $2 par value (4,000,000 shares 51 authorized,460,000 issued; 440,000 52 are outstanding) 920,000 53 Paid-in capital common stock 105,000 54 Total contributed capital 1,025,000 55 56 Retained earnings 1,396,491 57 Accumulated other comprehensive income 0 58 Less common stock in treasury, at cost (400,000) 59 Total stockholders' equity 60 61 Total liabilities and stockholders' equity 920,000 105,000 1,025,000 539,069 0 (400,000) 2,021,491 1,164,069 $4,286,056 $2,287,792 62 A B D 1 General Ledger Account Name Trial Balance Before Adj 12/31/x1 2 Debit Credit 3 Cash and cash equivalents 92,063 4 Accounts Receivable 913,780 5 Allowance for doubtful accounts 29,462 6 Interest Receivable 3,500 7. Inventory 1,270,160 8 Prepaid expenses 26,774 9 Other Current Assets 16,063 10 Investments 160,500 11 Fair Value Adjustment 0 0 12 Notes Receivable 220,000 13 Building 876,418 14 Equipment and furniture 332,983 15 Land 348,791 16 Accum Depr 656,465 17 Goodwill 493,951 18 Patents 217,000 19 Accounts Payable 1,169,343 20 Dividends payable 21 Interest payable 42,102 22 Unearned Consulting Revenue 261,220 23 Wages payable 81,350 24 Payroll taxes payable 8,850 25 Income tax payable 26 Long term liabilities 701,700 27 Common Stock 920,000 28 Paid-in capital common stock 105,000 29 Treasury Stock 400,000 30 Retained Earnings 539,069 31 Dividends 32 Accum Other Comprehensive Income 0 0 33 Sales revenue 9,253,346 34 Service revenue 1,169,385 35 Interest Revenue 0 36 Sales returns 162,400 37 Sales discounts 269,662 38 Product cost of goods sold 5,384,590 39 Service cost of goods sold 570,811 40 Advertising Expense 159,080 41 Bad debt expense 0 42 Depreciation and amortization 0 43 Professional Dues & subscriptions 21,470 44 Gain/loss on disposal 4,790 45 Income tax expense 0 45 Income tax expense 46 Insurance Expense 47 Interest expense 48 Legal and accounting fees 49 Miscellaneous 50 Office expense 51 Payroll taxes 52 Property taxes 53 Repair and maintenance 54 Research and development 55 Telephone 56 Travel and entertainment 57 Utilities Expense 58 Wage Expense 59 Salaries - Officers 60 Income Summary 61 Unrealized Gain/Loss-AFS 62 0 80,144 42,102 106,650 9,048 220,114 136,975 104,570 42,028 470,680 20,085 38,391 47,049 964,670 710,000 0 0 14,937,292 0 0 14,937,292 H 1 J K December 31, 20x0 $120,670 516,454 (24,975) 795,960 3,500 14,574 8,879 1,435,062 0 0 0 48,000 A B D E F G 1 CM Corporation 2 Balance Sheet 3 for the periods ended 4 December 31, 20x1 5 6 Assets 7 8 Current assets 9 Cash and cash equivalents $92,063 10 Accounts receivable 756,230 11 Allowance for doubtful accounts (29,462) 12 Inventory 1,270,160 13 Interest Receivable 3,500 14 Prepaid expenses 26,774 15 Other current assets 16,063 16 Total current assets 2,135,328 17 Long-Term Investments 18 Investments 160,500 19 +/-Fair Value Adjustment 0 160,500 20 Notes Receivable 000 21 22 Property, plant and equipment 1,558,192 23 Accumulated depreciation (656,465) 24 Net fixed assets 901,727 25 26 Other Assets 27 Goodwill 493,951 28 Patents 217,000 29 710,951 30 31 Total assets $4,128,506 32 33 34 Liabilities and Stockholders' Equity 35 36 Current liabilities 37 Accounts payable $1,169,343 38 Dividends payable 0 39 Unearned revenue 261,220 40 Interest payable 41 Wages payable 81,350 42 Payroll taxes payable 8,850 43 Income taxes payable 0 44 Total current liabilities 1,562,865 1,200,255 (591,965) 608,290 98,440 98,000 196,440 $2,287,792 42,102 $315,395 48,000 108,220 6,500 78,200 9,033 279,850 845,198 1 $315,395 48,000 108,220 6,500 78,200 9,033 279,850 1,562,865 845,198 701,700 278,525 35 36 Current liabilities 37 Accounts payable $1,169,343 38 Dividends payable 0 39 Unearned revenue 261,220 40 Interest payable 42,102 41 Wages payable 81,350 42 Payroll taxes payable 8,850 43 Income taxes payable 0 44 Total current liabilities 45 46 Long-term liabilities 47 48 Stockholders' equity 49 Contributed capital 50 Common stock, $2 par value (4,000,000 shares 51 authorized,460,000 issued; 440,000 52 are outstanding) 920,000 53 Paid-in capital common stock 105,000 54 Total contributed capital 1,025,000 55 56 Retained earnings 1,396,491 57 Accumulated other comprehensive income 0 58 Less common stock in treasury, at cost (400,000) 59 Total stockholders' equity 60 61 Total liabilities and stockholders' equity 920,000 105,000 1,025,000 539,069 0 (400,000) 2,021,491 1,164,069 $4,286,056 $2,287,792 62