prepare the journal entries to record transactions (1) through (20). Then prepare the necessary adjusting entries (21) through (26) to correctly report net income for the period. If no entry is required for a transaction, select "No journal entry required or N/A" in the first account field. Each journal entry is worth 1 point. Credit is granted based on the accuracy of the amount, the choice of debit or credit, and the account name used.

Prepare the balance and the multi-step income statement as of December 31, 2021, including the proper heading for each financial statement. The balance sheet and the income statement are worth 20 points, respectively. Your grade will be based on the correctness of headings, the name of the line items and the amount presented, and the structure of each financial statement.

2. INSTRUCTIONS The trial balance of LifelsGood Inc. as of January 1, 2021, had the following normal balances: Cash Petty cash Accounts receivable Allowance for doubtful accounts (ADA) Supplies Merchandise inventory (48 @ $300) Equipment Van Building Accumulated depreciation Land Sales tax payable Employee income tax payable FICASocial Security tax payable FICAMedicare tax payable Warranty payable Unemployment tax payable Notes payable-Building Bonds payable $113,718 100 39,390 4,662 210 14,400 9,000 27,000 125,000 28,075 25,000 390 1,000 840 210 918 945 92,762 50,000 1 Discount on bonds payable Common stock Retained earnings 1,000 50,000 125,016 6. During 2021, LifelsGood experienced the following transactions: 1. Paid the sales tax payable from 2020. 2. Paid the balance of the payroll liabilities due for 2020 (federal income tax, FICA taxes, and unemployment taxes). 3. Issued common stock for $30,000. 4. Purchased $500 of supplies on account. 5. Purchased 190 heating system units at a cost of $310 per unit. Cash was paid for the purchase. Wrote off $3,670 of uncollectible accounts receivable after hearing the news of one of the clients' bankruptcy. 7. Sold a total of 210 heating system units for $600 each plus sales tax of 5 percent. All sales were on credit. Be sure to compute the COGS using the FIFO cost method. 8. Billed $125,000 of system repair service for the year. Credit card sales amounted to $58,000, and the credit card company charged a 4 percent fee. The remaining were sales on account. Sales tax is not charged on this service. 9. Replenished the petty cash fund on June 30. The fund had $10 cash and receipts of $75 for yard mowing and $15 for office supplies expenses. 10. Collected the amount due from the credit card company. 11. Paid the sales tax collected on the heating system sales in the previous transaction #7. 12. Collected $198,000 of accounts receivable during the year. 13. Paid employees a total of $96,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income taxes withheld amounted to $10,600. No employee exceeded $110,000 in total wages. The net salaries were paid in cash. 14. Paid $1,625 warranty repairs during the year. 15. Paid $18,500 of advertising expenses during the year. 16. Paid $6,100 of utility expenses for the year. 17. Paid $9,200 of the Employee Income Tax Payable, $5,280 of the FICA Tax - Soc. Sec. Tax Payable and $1,320 of the FICA Tax - Medicare Tax Payable. Also, paid the Payroll Tax Expense for the 7.5% employer matching of FICA taxes on $88,000 of salaries. 18. Paid the remaining accounts payable outstanding. 2 19. Paid bond interest and amortized the discount using the straight-line method at year-end. The bond was issued on Dec. 31, 2020, at 98 and pays 6 percent of interest every Dec. 31. This bond matures on Dec. 30, 2025. 20. Paid $14,238 annual installment of long-term notes payable. The interest rate for the note is 7 percent. Adjustment 21. There was $190 of supplies on hand at the end of the year. 22. Recognized the uncollectible accounts expense for the year using the allowance method. The Company now estimates that 1 percent of sales on account will not be collected 23. Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in 2018, has a five-year life and a $2,000 salvage value. The van has a four-year life and a $6,000 salvage value. The building has a 40-year life and a $10,000 salvage value. The company uses a straight-line depreciation method for the equipment and the building. The van is fully depreciated. 24. The heating systems sold in transaction 7 were covered with a one-year warranty. The Company estimated that the warranty cost would be 2 percent of alarm sales. 25. The unemployment tax on the three employees has not been paid. Record the accrued unemployment tax on the salaries for the year. The unemployment tax rate is 4.5 percent and gross wages for all three employees exceeded $7,000. 26. Recognized the employer Social Security and Medicare payroll tax that has not been paid on $8,000 of salaries expense. 3. REQUIREMENTS Using the template provided, prepare the journal entries to record transactions (1) through (20). Then prepare the necessary adjusting entries (21) through (26) to correctly report net income for the period. If no entry is required for a transaction, select "No journal entry required or N/A" in the first account field. Each journal entry is worth 1 point. Credit is granted based on the accuracy of the amount, the choice of debit or credit, and the account name used. Prepare the balance and the multi-step income statement as of December 31, 2021, including the proper heading for each financial statement. The balance sheet and the income statement are worth 20 points, respectively. Your grade will be based on the correctness of headings, the name of the line items and the amount presented, and the structure of each financial statement. 2. INSTRUCTIONS The trial balance of LifelsGood Inc. as of January 1, 2021, had the following normal balances: Cash Petty cash Accounts receivable Allowance for doubtful accounts (ADA) Supplies Merchandise inventory (48 @ $300) Equipment Van Building Accumulated depreciation Land Sales tax payable Employee income tax payable FICASocial Security tax payable FICAMedicare tax payable Warranty payable Unemployment tax payable Notes payable-Building Bonds payable $113,718 100 39,390 4,662 210 14,400 9,000 27,000 125,000 28,075 25,000 390 1,000 840 210 918 945 92,762 50,000 1 Discount on bonds payable Common stock Retained earnings 1,000 50,000 125,016 6. During 2021, LifelsGood experienced the following transactions: 1. Paid the sales tax payable from 2020. 2. Paid the balance of the payroll liabilities due for 2020 (federal income tax, FICA taxes, and unemployment taxes). 3. Issued common stock for $30,000. 4. Purchased $500 of supplies on account. 5. Purchased 190 heating system units at a cost of $310 per unit. Cash was paid for the purchase. Wrote off $3,670 of uncollectible accounts receivable after hearing the news of one of the clients' bankruptcy. 7. Sold a total of 210 heating system units for $600 each plus sales tax of 5 percent. All sales were on credit. Be sure to compute the COGS using the FIFO cost method. 8. Billed $125,000 of system repair service for the year. Credit card sales amounted to $58,000, and the credit card company charged a 4 percent fee. The remaining were sales on account. Sales tax is not charged on this service. 9. Replenished the petty cash fund on June 30. The fund had $10 cash and receipts of $75 for yard mowing and $15 for office supplies expenses. 10. Collected the amount due from the credit card company. 11. Paid the sales tax collected on the heating system sales in the previous transaction #7. 12. Collected $198,000 of accounts receivable during the year. 13. Paid employees a total of $96,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income taxes withheld amounted to $10,600. No employee exceeded $110,000 in total wages. The net salaries were paid in cash. 14. Paid $1,625 warranty repairs during the year. 15. Paid $18,500 of advertising expenses during the year. 16. Paid $6,100 of utility expenses for the year. 17. Paid $9,200 of the Employee Income Tax Payable, $5,280 of the FICA Tax - Soc. Sec. Tax Payable and $1,320 of the FICA Tax - Medicare Tax Payable. Also, paid the Payroll Tax Expense for the 7.5% employer matching of FICA taxes on $88,000 of salaries. 18. Paid the remaining accounts payable outstanding. 2 19. Paid bond interest and amortized the discount using the straight-line method at year-end. The bond was issued on Dec. 31, 2020, at 98 and pays 6 percent of interest every Dec. 31. This bond matures on Dec. 30, 2025. 20. Paid $14,238 annual installment of long-term notes payable. The interest rate for the note is 7 percent. Adjustment 21. There was $190 of supplies on hand at the end of the year. 22. Recognized the uncollectible accounts expense for the year using the allowance method. The Company now estimates that 1 percent of sales on account will not be collected 23. Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in 2018, has a five-year life and a $2,000 salvage value. The van has a four-year life and a $6,000 salvage value. The building has a 40-year life and a $10,000 salvage value. The company uses a straight-line depreciation method for the equipment and the building. The van is fully depreciated. 24. The heating systems sold in transaction 7 were covered with a one-year warranty. The Company estimated that the warranty cost would be 2 percent of alarm sales. 25. The unemployment tax on the three employees has not been paid. Record the accrued unemployment tax on the salaries for the year. The unemployment tax rate is 4.5 percent and gross wages for all three employees exceeded $7,000. 26. Recognized the employer Social Security and Medicare payroll tax that has not been paid on $8,000 of salaries expense. 3. REQUIREMENTS Using the template provided, prepare the journal entries to record transactions (1) through (20). Then prepare the necessary adjusting entries (21) through (26) to correctly report net income for the period. If no entry is required for a transaction, select "No journal entry required or N/A" in the first account field. Each journal entry is worth 1 point. Credit is granted based on the accuracy of the amount, the choice of debit or credit, and the account name used. Prepare the balance and the multi-step income statement as of December 31, 2021, including the proper heading for each financial statement. The balance sheet and the income statement are worth 20 points, respectively. Your grade will be based on the correctness of headings, the name of the line items and the amount presented, and the structure of each financial statement