Problem 1 (36 points) Wing Wine Beverage Club Unadjusted Trial Balance For the period ended 31 December 2021 Trial Balance Unit = HK$ Dr. Cr. 163,000 163,570 240,000 547,260 28,000 81,000 12,000 1,362,000 Cash on hand Bank Beverage Stock (1 Dec 2021) Accounts Receivable Utilities Deposit Paid Office Supplies Prepaid Club Liquor License Fixed Assets Accumulated Depreciation Allowance for Doubtful Accounts Accounts Payable Salaries & Wages Payable Unearned Revenue Bank Loan Common Stock Retained earnings Revenue Dividends Salaries & Wages Expenses Rental Fee Bad Debt Expense Promotion Expenses 180,000 5,000 282,400 6,000 440,800 35,000 140,000 897,770 1,965,800 30,000 644,300 582,040 5,000 94,600 3,952,770 3,952,770 Wing Wine Club has the above unadjusted trial balance for the period ended 31 December 2021. Beverage stock on hand after stock take by the end of the month was valued at $50,000. Additional information is as follows: a) The fixed assets are depreciated over 8 years using straight-line method, with no residual value. b) The prepaid club liquor license is for 12 months from 1 January 2022 to 31 December 2022. c) Purchased $60,000 beverage which were in transit (FOB destination) that were not included in the stock take, carriage inwards on this purchase at $3,000, Wing Wine Club will settle the payment upon receipt of invoice d) Returned $1,000 beverage to supplier at the end of the month due to spoilage, the beverage was purchased on account and has not been settled. e) Beverage at $2,000 sold on account in December was returned by member at the end of the month due to damaged packing. f) $1,000 loan interest for the month of Dec is due but unpaid. g) A wedding couple that paid $10,000 deposit to the club previously called in December and requested to postpone their wedding ceremony planned late December due to social distancing measures. The wedding couple agreed to forfeit 10% of the paid deposit and requested to hold the rest as credit for the wedding in future, Wing Wine Club accepted. h) While preparing the bank reconciliation statement, the accountant noticed that there was a NSF cheque of $1,000 received from supplier. i) Upon further review, it was noticed that among the $81,000 office supplies on hand, $4,000 of the office supplies were damaged and could not be used, the management decided to dispose the damaged office supplies. j) The Financial Controller estimates that uncollectible accounts will be $18,000. The current Allowance for Doubtful Accounts has a $5,000 credit balance prior to adjustment. The club is using % of Receivable Method. 3 k) Upon further review by the Financial Controller, among the Salary & Wages Expense recorded in December, casual labor wages totaling $1,500 was in fact for 1 January 2022 and should not be recorded in December 2021. The $1,500 casual labor wage was not paid by the end of December. Required: (i) Prepare journal entries / adjusting entries for all of the above transactions a) to k). (2 points each) (ii) Prepare a Profit and Loss Statement for the month ended 31 December 2021. (4.5 points) (iii) Prepare a Retained Earnings Statement and Balance Sheet for the year ended 31 December 2021. (9.5 points) Write down your answers on the answer sheet