Record all necessary month-end adjusting entries. First, review the summary general ledger and identify accounts that could need adjusted because the related activity during the month was not previously recorded. Make an X by the accounts you identify that need an adjustment.

Then, use the following information to make adjusting entries.

a. Obtain and review the debt agreement on the Line of Credit with Wells Fargo (see page 7 of this document). Compute and record interest expense on the amount owed on the line of credit for the month of January. FTS intends to repay all amounts borrowed on the Wells Fargo Line of Credit on the termination date. No other borrowings or repayment occurred on the line of credit during January 2021.

b. Obtain the schedule of property, plant, and equipment held on December 31, 2020. (Excel Workbook: Depreciation). The schedule of assets gives the monthly depreciation expense for all assets owned as of the end of 2020. Add the long-term assets purchased in January 2021 to the schedule of assets and compute the depreciation expense for the old and new assets for one month.

Fuzzys records depreciation and amortization expense for a full month in the first month the asset is used to produce revenue regardless of how many days the asset is actually used in the month purchased. FTS used all physical assets purchased in January 2021 during January 2021.

The trademark paid for in January has not yet been used during 2021. The company estimates a $0 residual value for all assets and useful lives by will be as follows:

Equipment 5 years; Furniture and Fixtures 7 years; Vehicles 5 years; Trademark 25 years.

c. The company provides high deductible health insurance coverage to all salaried employees. The policy began on May 1, 2020 and will expire on April 30, 2021. The annual insurance premium of $48,000 is paid in quarterly payments of $12,000 on May 1, August 1, November 1 and February 1.

d. The company also has a policy for business liability and property insurance (see page 8 of this document) that is paid monthly as coverage is received. See the insurance policy provided at the end of this document for terms and payment information on monthly coverage. Determine the amount of prepaid insurance at the end of January and record the adjusting entry related to Business Insurance.

e. Obtain the commercial lease agreement (Excel Workbook: Rent Agreement). The company has made all payments in accordance with the agreement. Determine the amount of prepaid rent at the end of January and record the adjusting entry related to January rent.

f. The company has estimated that they will not collect $3,800 from all customers who owe on account.

g. FTS received invoices at the beginning of February (see Excel Workbook: Feb Invoices) that may relate to goods and services received in January. The invoices received in February have not been recorded or paid. Make any necessary adjustments as of the end of January.

h. At the end of January 2021, FTS employees counted all paper products, office supplies, and cleaning supplies on hand and estimated the value to be approximately $5,721.

i. The inventory control team counted inventory at the end of the day on January 31, 2021 and determined the cost of inventory on hand to be $31,945.

j. On December 28, 2020, FTS received a payment from a customer in the amount of $1,325 for catering services provided to the customer on January 12^th, 2021.

k. On November 1st, 2020, FTS purchased a certificate of deposit from First National Bank for $21,500. The deposit earns interest of 1.25% annually and has a maturity end date of 11/1/2022. Interest earned for each year is received on November 1^st of each year.

l. The tax person at your firm estimated income tax expense for the month of January to be $4,250. Income tax will be paid on March 15^th.

Review the accounts in the Detail General Ledger and make sure you are not missing an adjusting entry and that all amounts appear reasonable.

Obtain the information for any other necessary adjusting entries (from Professor Wood).

Schedule of Property, plant, and Equipment Depreciation Expense Adjustment Purchase Date Useful Life Annual Total Cost Depreciation 12/31/2020 Accumulated Depreciation One Month Expense Description Quantity 10/5/2018 10/5/2018 10/5/2018 Stovetop Grills Ovens Freezers & Refrigera Subtotal Equipment 3 2 2 5 5 5 $ 47,000 $ 9,400.00 $ 58,000 $ 11,600.00 $ 51,360 $ 10,272.00 $ 156,360 $ 31,272.00 i Besle $ 21,150.00 $ 26,100.00 $ 23,112.00 $74,947.50 $ $ $ $ 783.33 966.67 856.00 2,606.00 10/5/2018 Furniture & Fixtures $ 21,731 $ 3,104.43 $ 6,984.96 $ 258.70 Total as of 12/31/2018 $ 178,091 $ 81,932.46 $ 2,864.70 January 2021 Additions $0.00 $ $0.00 $ $0.00 $ $0.00 $ $0.00 $ Total January $ 2.864.70 (Add more rows if you need it COMMERCIAL LEASE AGREEMENT This Lease to begin on 1 day of January, 2020 by and between Stein & Locke Real Estate Equities (hereinafter "Landlord") and Fluffy's Taco Shop (hereinafter "Tenant"). In consideration for the mutual promises and covenants contained herein, and for other good and valuable consideration, the parties hereby agree as follows: 1. The Landlord leases to the Tenant, and the Tenant rents from the Landlord the following described premises: 2800 N. College Drive Beach Ball, FL 43215 2. The term of the Lease shall be for 2 years commencing January 1, 2020 and ending December 31, 2021. 3. The Tenant shall pay to Landlord as rent $72,000 per year in equal quarterly installments of $18,000 payable in advance at the beginning of each quarter on January 3, April 1, July 1, and October 1. 4. This Lease is subject to all present or future mortgages affecting the premises. 5. Tenant shall use and occupy the premises only as a restraunt business; subject at all times to the approval of the Landlord. 6. The Tenant shall not make any alterations, additions or improvements to the premises without the prior written consent of the Landlord. 7. The Landlord, at his own expense, shall furnish the following utilities or amenities for the benefit of the Tenant: N/A 8. The Tenant, at his own expense, shall furnish the following: Appliances, equipment, furniture 9. The Tenant shall comply with all rules, regulations, ordinances, codes, and laws of all governmental authorities having jurisdiction over the premises. 10. The Tenant shall not sublet or assign the premises nor allow any other person or business to use or occupy the premises without the prior written consent of the Landlord, which consent may not be unreasonably withheld. 11. At the end of the term of this Lease, the Tenant shall surrender and deliver the premises in the same condition (subject to any additions, alterations, or improvements if any) as presently exists, reasonable wear and tear excluded. 12. Upon default in any term or condition of this Lease, the Landlord shall have the right to undertake any or all other remedies permitted by Law. Ben E. Keith Customer Order Frank Farmer Customer Order Invoice Date 2/3/2021 Invoice Date 2/2/2021 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Delivery 1/29/2021 Cust. Order : 550 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery ####### Cust. Order # 104 Cust.ID FTS001 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 1 Beef 500 lbs. $2.21/b. $ 1,105 1 Tomatoes 1750 $ 0.50 $ 875 2 Poultry 500 lbs. $1.83/lb. $ 915 2 Lettuce 6750 $ 0.25$ 169 3 Jalapenos 1500 $ 0.10 $ 150 Total Cos $ 2,020 Total Cos $ 1,194 7P4 Authorized by/Received 7PL Authorized by/Received TXU Energy Sodexo Customer Order Invoice Date 2/7/2021 Customer Order Invoice Date 2/2/2021 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Date 1/31/2021 Customer ID 909852 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery ####### Cust. Order # 432 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 2.75$ 2,563.00 1024 Paper plates 400 $ 0.25$ 100 234859 Electric 932 $ January 1throuh January 31, 2021 3214 Cups 1200 $ 0.15$ 180 6549 Plasticware 850 $ 0.30 $ 255 Total Cos $ 2,563.00 Total Cos $ 535.00 TPL Authorized by 7PL Authorized by Sally's Meat Market Customer Order Joses Flour Mill Customer Order Invoice Date 2/4/2021 Invoice Date 2/4/2021 Ship To: Fluffy's Taco Shop 2800 N College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Delivery 2/2/2021 Cust. Order # 550 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery 2/4/2021 Cust. Order # 550 Cust.ID FTS013 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 1 Beet 200 lbs. $2.29/16 $ 458.00 612 Flour 50 lb bags 25 $62.50 $ 1,562.50 2 Poultry 750 lbs. $1.79/b. $ 1,342.50 614 Corn 25 lb bags 20 $35.50 $ 710.00 Total Cog $ 1,800.50 Total Cog $ 2,272.50 7PL Authorized by/Received 7PL Authorized by/Received Allstate Insurance Business Liability and Property Insurance Agreement Why it's beneficial. Whether you have a business on Main Street or work under the roof of your own home, the Allstate Business Owner Policy offers a flexible package of protection that can adjust and grow with your business as it grows. Allstate helps keep you ready for tomorrow. Pertinent Financial Information A. Term. The term of this policy with Fuzzy's Taco Shop shall begin at 12:00 a.m. on July 1, 2020 and end as of 12:00 a.m. June 30, 2021. B. Payment Terms. The total annual cost of this policy is $18,350. the first payment of $10,350 is due on June 30, 2020. The remainder is payable in 8 monthly installments of $1,000 each, due on the 1st day of each month beginning on November 1, 2020. Property Coverage is for your building and/or business property, including the contents of your building. for direct physical loss. General liability Provides protection for legal liability as a result of a lawsuit or other claim. Loss of business income Protection for loss of business income for up to 12 months due to a covered loss. Equipment breakdown Protection for electrical, air conditioning, refrigeration, boiler pressure vessel, and communication equipment from physical damage caused by mechanical and electrical Wells Fargo Line of Credit Wells Fargo hereby agrees to make $250,000 available to FTS between the period of April 1, 2020 and March 31, 2023. Amounts may be borrowed under the line of credit at the request of the Fuzzy's Taco Shop and may be repaid at any time prior to the termination date of the line of credit on March 31, 2023. Annual interest on actual borrowings is 7.0%. Interest on actual borrowings must be paid quarterly on March 31, June 30, September 30, and December 31. Wells Fargo Business Loan Terms Date September 1, 2018 Credit $125,000 Principle Amount Amount Terms 5-years Interest 7.25% Annual Fixed Rate Interest, payable Monthly by the 1st of each month (for Rates the previous month) until the principle amount is repaid. Collateral None: unsecured loan. Fees No Annual or Pre-payment Fees. | See the amortization schedule for the Wells Fargo Business Loan Schedule of Property, plant, and Equipment Depreciation Expense Adjustment Purchase Date Useful Life Annual Total Cost Depreciation 12/31/2020 Accumulated Depreciation One Month Expense Description Quantity 10/5/2018 10/5/2018 10/5/2018 Stovetop Grills Ovens Freezers & Refrigera Subtotal Equipment 3 2 2 5 5 5 $ 47,000 $ 9,400.00 $ 58,000 $ 11,600.00 $ 51,360 $ 10,272.00 $ 156,360 $ 31,272.00 i Besle $ 21,150.00 $ 26,100.00 $ 23,112.00 $74,947.50 $ $ $ $ 783.33 966.67 856.00 2,606.00 10/5/2018 Furniture & Fixtures $ 21,731 $ 3,104.43 $ 6,984.96 $ 258.70 Total as of 12/31/2018 $ 178,091 $ 81,932.46 $ 2,864.70 January 2021 Additions $0.00 $ $0.00 $ $0.00 $ $0.00 $ $0.00 $ Total January $ 2.864.70 (Add more rows if you need it COMMERCIAL LEASE AGREEMENT This Lease to begin on 1 day of January, 2020 by and between Stein & Locke Real Estate Equities (hereinafter "Landlord") and Fluffy's Taco Shop (hereinafter "Tenant"). In consideration for the mutual promises and covenants contained herein, and for other good and valuable consideration, the parties hereby agree as follows: 1. The Landlord leases to the Tenant, and the Tenant rents from the Landlord the following described premises: 2800 N. College Drive Beach Ball, FL 43215 2. The term of the Lease shall be for 2 years commencing January 1, 2020 and ending December 31, 2021. 3. The Tenant shall pay to Landlord as rent $72,000 per year in equal quarterly installments of $18,000 payable in advance at the beginning of each quarter on January 3, April 1, July 1, and October 1. 4. This Lease is subject to all present or future mortgages affecting the premises. 5. Tenant shall use and occupy the premises only as a restraunt business; subject at all times to the approval of the Landlord. 6. The Tenant shall not make any alterations, additions or improvements to the premises without the prior written consent of the Landlord. 7. The Landlord, at his own expense, shall furnish the following utilities or amenities for the benefit of the Tenant: N/A 8. The Tenant, at his own expense, shall furnish the following: Appliances, equipment, furniture 9. The Tenant shall comply with all rules, regulations, ordinances, codes, and laws of all governmental authorities having jurisdiction over the premises. 10. The Tenant shall not sublet or assign the premises nor allow any other person or business to use or occupy the premises without the prior written consent of the Landlord, which consent may not be unreasonably withheld. 11. At the end of the term of this Lease, the Tenant shall surrender and deliver the premises in the same condition (subject to any additions, alterations, or improvements if any) as presently exists, reasonable wear and tear excluded. 12. Upon default in any term or condition of this Lease, the Landlord shall have the right to undertake any or all other remedies permitted by Law. Ben E. Keith Customer Order Frank Farmer Customer Order Invoice Date 2/3/2021 Invoice Date 2/2/2021 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Delivery 1/29/2021 Cust. Order : 550 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery ####### Cust. Order # 104 Cust.ID FTS001 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 1 Beef 500 lbs. $2.21/b. $ 1,105 1 Tomatoes 1750 $ 0.50 $ 875 2 Poultry 500 lbs. $1.83/lb. $ 915 2 Lettuce 6750 $ 0.25$ 169 3 Jalapenos 1500 $ 0.10 $ 150 Total Cos $ 2,020 Total Cos $ 1,194 7P4 Authorized by/Received 7PL Authorized by/Received TXU Energy Sodexo Customer Order Invoice Date 2/7/2021 Customer Order Invoice Date 2/2/2021 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Date 1/31/2021 Customer ID 909852 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery ####### Cust. Order # 432 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 2.75$ 2,563.00 1024 Paper plates 400 $ 0.25$ 100 234859 Electric 932 $ January 1throuh January 31, 2021 3214 Cups 1200 $ 0.15$ 180 6549 Plasticware 850 $ 0.30 $ 255 Total Cos $ 2,563.00 Total Cos $ 535.00 TPL Authorized by 7PL Authorized by Sally's Meat Market Customer Order Joses Flour Mill Customer Order Invoice Date 2/4/2021 Invoice Date 2/4/2021 Ship To: Fluffy's Taco Shop 2800 N College Drive Beach Ball, FL 43215 Ship To: Fluffy's Taco Shop 2800 N. College Drive Beach Ball, FL 43215 Delivery 2/2/2021 Cust. Order # 550 Cust. ID FTS013 Terms Net 30 F.O.B. Point Delivery Delivery 2/4/2021 Cust. Order # 550 Cust.ID FTS013 Terms Net 30 F.O.B. Point Delivery Item # Description Quantity Unit Cost Total Cost Item # Description Quantity Unit Cost Total Cost 1 Beet 200 lbs. $2.29/16 $ 458.00 612 Flour 50 lb bags 25 $62.50 $ 1,562.50 2 Poultry 750 lbs. $1.79/b. $ 1,342.50 614 Corn 25 lb bags 20 $35.50 $ 710.00 Total Cog $ 1,800.50 Total Cog $ 2,272.50 7PL Authorized by/Received 7PL Authorized by/Received Allstate Insurance Business Liability and Property Insurance Agreement Why it's beneficial. Whether you have a business on Main Street or work under the roof of your own home, the Allstate Business Owner Policy offers a flexible package of protection that can adjust and grow with your business as it grows. Allstate helps keep you ready for tomorrow. Pertinent Financial Information A. Term. The term of this policy with Fuzzy's Taco Shop shall begin at 12:00 a.m. on July 1, 2020 and end as of 12:00 a.m. June 30, 2021. B. Payment Terms. The total annual cost of this policy is $18,350. the first payment of $10,350 is due on June 30, 2020. The remainder is payable in 8 monthly installments of $1,000 each, due on the 1st day of each month beginning on November 1, 2020. Property Coverage is for your building and/or business property, including the contents of your building. for direct physical loss. General liability Provides protection for legal liability as a result of a lawsuit or other claim. Loss of business income Protection for loss of business income for up to 12 months due to a covered loss. Equipment breakdown Protection for electrical, air conditioning, refrigeration, boiler pressure vessel, and communication equipment from physical damage caused by mechanical and electrical Wells Fargo Line of Credit Wells Fargo hereby agrees to make $250,000 available to FTS between the period of April 1, 2020 and March 31, 2023. Amounts may be borrowed under the line of credit at the request of the Fuzzy's Taco Shop and may be repaid at any time prior to the termination date of the line of credit on March 31, 2023. Annual interest on actual borrowings is 7.0%. Interest on actual borrowings must be paid quarterly on March 31, June 30, September 30, and December 31. Wells Fargo Business Loan Terms Date September 1, 2018 Credit $125,000 Principle Amount Amount Terms 5-years Interest 7.25% Annual Fixed Rate Interest, payable Monthly by the 1st of each month (for Rates the previous month) until the principle amount is repaid. Collateral None: unsecured loan. Fees No Annual or Pre-payment Fees. | See the amortization schedule for the Wells Fargo Business Loan