QUESTION $6$ FROM THE REQUIRED SECTION. PADDIE CORPORATION

UNADJUSTED TRIAL BALANCE

DECEMBER $31,2020$

$)$

CASH

FV$-$NI Short Term INVESTMENTS

ACCOUNTS RECEIVABLE

ALLOWANCE FOR DOUBTFUL ACCOUNTS

INVENTORY

PREPAID INSURANCE

OFFICE BUILDING

ACCUMULATED DEPRECIATION $($OFFICE BUILDING$)$

OFFICE EQUIPMENT

ACCUMULATED DEPRECIATION $($OFFICE EQUIPMENT$)$

ACCOUNTS PAYABLE

SALARIES PAYABLE

NOTES PAYABLE

PREFERRED STOCK, $30,000$ OUTSTANDING ON DECEMBER $31,2020$

COMMON STOCK, $140,000$ ISSUED and OUTSTANDING ON DEC $31,2020$

RETAINED EARNINGS, January $1$

SALES REVENUE

SALES DISCOUNTS

SALES RETURNS AND ALLOWANCES

PURCHASES

PURCHASES DISCOUNTS

FREIGHT $-$ IN

SALARIES EXPENSE

RENT EXPENSE

INSURANCE EXPENSE

SUPPLIES EXPENSE

DEBIT

Version $2$

Covers Appendix C$,$ Chapter $4$ and $5$

CREDIT

GAIN ON SALE OF ASSETS OF DISCONTINUED ACTIVITY

ADVERTISING EXPENSE

OPERATING LOSS ON DISCONTINUED OPERATIONS

TELEPHONE EXPENSE

CASH DIVIDENDS DECLARED $-$ Preferred Dividends

CASH DIVIDENDS DECLARED $-$Common Dividends

TOTAL

NOTE: All revenue, expense, gain and loss figures above are before tax.

This company uses a Periodic Inventory system.

The company follows ASPE

ADDITIONAL INFORMATION

Information for Adjusting Entries:

PADDIE Corp, uses the allowance method to record Bad Debts based on an estimate of $4\%$ of the Accounts Receivable.

The Office Building is depreciated at $8\%$ of cost per year

The Office Equipment is depreciated straight line and has a residual value of $$8,000.$ It was purchased on August $1,2020$

and it is estimated to have a useful life of $4$ years.

FV$-$NI Short term investments have a fair market value of $$33,100$ on December $31,2020.$ Investments need to

be recorded at fair market value at year end and any gain or loss is recorded on the Income Statement.

The Prepaid Insurance includes : Policy A$,$ cost of $$12,700,$ two year term, paid in advance on May $1,2020$

AND Policy B$,$ cost of $$3,756,$ one year term paid in advance on September $1,2020.$

The company performed a year end physical count of its inventory as at December $31,2020.$

The amount of inventory on hand at December $31,2020$ amounted to $$420,200.$

Inventory is maintained on a PERIODIC basis. Therefore the year end inventory adjustment is required.

A one year $5\%$ note payable of $$60,000$ was signed on October $1,2020.$

Items affecting Financial Statements $($do not record any adjusting entries; make the appropriate adjustment on the affected Financial Statement$)$

A$.$ There was an error that was discovered in prior years where last year's depreciation expense was overstated by $$90,000.$

B$.$ The Number of common shares outstanding at January $1$ was $100,000.$ On March $1,$ an additional $30,000$ were issued.

On October $1,$ another $10,000$ common share were issued.

C$.$ The Cash balance on the trial balance includes a $$15,000$ bank overdraft from another bank and a $2$ year investment of $$40,000.$

D$.$ The Accounts Receivable balance includes a credit balance in a customer's account equal to $$12,000.$

E$.$ The tax rate is $30\%$

Prepare the Adjusting Journal Entries required for the $2020$ fiscal year at December $31,2020($FOR ITEMS $1-7$ ABOVE$)20$ marks

Prepare an adjusted Trial Balance $($Update the Trial Balance with new accounts and new balances after adjusting entries$)5$ marks

Prepare a multi$-$step Income Statement $(15$ marks$)$

Calculate Earnings per share and show the presentation on the Income Statement $(5$ marks$)$

Prepare a Statement of Retained Earnings $(5$ marks$)$

Prepare a Classified Balance Sheet $(20$ marks$)$FROM THE REQUIRED SECTION.