Question 2 (41 marks) The Country Golf Club is a company which allows people to learn and practice playing golf. Adjusting entries are prepared monthly. The Club earns its revenue in two ways: i. Club members pay their annual membership fees in advance by 10 January. Cash collected in advance is credited as unearned membership fees. The portion earned is recorded as Membership fees earned at the end of each month. ii. The Club allows secondary school to bring students to use the facility without joining as members. The amounts charged are recorded as Guest Fee Revenue. Some guest fees are billed at the end of the month. The unadjusted trial balance of Country Golf Club as at 31 December 2020 is shown as follows: $594,600 $10,500 $73,800 $13,200 $13,500 $360,000 COUNTRY GOLF CLUB Unadjusted Trial Balance December 31, 2020 Cash Accounts receivable Golf supplies Prepaid rent Prepaid insurance Furniture and fixture Accumulated depreciation: furniture and fixture Accounts payable Interest payable Income taxes payable Note payable Unearned membership fees Salaries payable Share capital Retained earnings Dividend Guest Fee Revenue Membership fees earned Golf supplies expense Depreciation expense: Office equipment Rent expense Insurance expense Salaries expense Interest expense Income tax expense Totals 41,250 $4,200 $2,400 $586,200 $180,000 $420,000 $5,700 $90,000 $24,000 $3,000 $192,000 $4,620,000 $335,100 $41,250 $142,500 $29,700 $3,960,000 $2,400 $586,200 $6,165,750 $6,165,750 Other data 1. The furniture and fixtures in the clubhouse had an estimated life of 8 years. 2. On 1 October 2020, the Club borrowed money by signing 5 month, 8-percent note payable. The entire note, plus interest, is due on 28 February 2021. 3. All uneared membership fees received as cash in advance at the beginning of the year have been earned in December. 4. Golf supplies still on hand on 31 December 2020 amount to $50,400. 5. A one-year property insurance policy costing $32,400 had been purchased on 30 April, with the policy effective from May 2020. 6. Salaries that have not yet been recorded or paid amount to $40,800. 7. At 31 December, $9,600 guest fees owed by the secondary schools has not yet been billed or recorded. 8. Rent of $39,600 for 3 months was paid on 1 October 2020. 9. The club's CPA estimates that income taxes expense for the entire year is $624,000, which is due in April 2021. Required a) Journalize the adjusting entries on 31 December 2020. (Omit explanations.) (18 marks) b) Prepare the adjusted trial balance at 31 December 2020. (12 marks) c) Prepare the income statement and the statement of retained earnings for the year ended 31 December 2020. (11 marks)
