Required 1 Prepare journal entries 2 Prepare the Statement of Earnings and Statement of Financial Position, for the period ended and as at December 31, 2021 Chloe Bakery and Catering Services (CBCS) Unadjusted Trial Balance December 31, 2021 Account name Debit CAD$ Credit CAD$ Cash 26,400 Accounts Receivable 27,800 Supplies 4,880 Inventory 23,600 Prepaid Insurance 5,760 Land 880,000 Buildings 195,000 Accumulated Depreciation Buildings 19,500 Furniture 33,600 Accumulated Depreciation Furniture 6,720 Machinery 28,000 Accumulated Depreciation Machinery 11,200 Computer 2,500 Accounts Payable 9,600 Deferred Revenue 75,000 Bank Loan Payable, due 2025 580,000 Contributed Capital 60,000 Retained Earnings (January 1, 2021) 166,020 Service Revenue 356,000 Sales Revenue 249,000 Cost of Sales 179,800 Salaries Expense 109,200 Utilities Expense 13,500 Marketing Expense 3,000 $1,533,040 $1,533,040 Additional information An annual insurance policy was purchased on October 1, 2021, effective the same day, for $5,760 cash A count of supplies was also done on December 31, 2021, where $1,340 worth of supplies was found on hand CBCS uses a perpetual inventory system to account for food and other inventories Below is a breakdown of food inventory on hand at December 31, 2021 Cost Net Realizable Value Inventory Raw ingredients $11,600 $12,400 Inventory Finished goods $2,000 $1,800 The company ran out of cake and pastry flour, which is a key ingredient They placed an order for 50 bags of the flour at a cost $25 each on December 28, 2021 Terms of this order were 2 10, n 30 FOB shipping point The company received an email notifying them of shipment on December 31, 2021, and it generally takes 7 businesses days to deliver Chloe looked forward to replenishing stocks and adding them to inventory upon receipt CBCS has the following long lived assets Date of purchase Depreciation method Land January 1, 2019 Buildings January 1, 2019 Straight line Estimated useful life 20 years Furniture January 1, 2019 Straight line Estimated useful life 10 years Machinery January 1, 2020 Double declining balance Estimated useful life 5 years Computer September 30, 2021 Straight line Estimated useful life 5 years Residual value $500 Customers must pay a $1,000 non refundable booking deposit for a catering package provided by CBCS An analysis of bookings during 2021 indicated that 75 deposits were received and credited to Deferred Revenue By December 31, 2021, CBCS had provided the service and completed 25 of the 75 bookings All sales are done with cash and or credit card Cash received from the sales is counted daily and is deposited in the companys bank account at the end of each month Bank reconciliations are prepared on an annual basis A local business made an advance payment of $3,500 to CBCS on December 15, 2021 for an event to be held in March 2022 This amount was credited to Service Revenue at the time of receipt CBCS delivered meals worth $1,300 to a customer in October 2021, but has not received the payment and all methods of contacting the customer have been exhausted and the amount has been deemed uncollectible Chloe has reviewed the accounts receivable balance and notes that 60 of accounts receivable balance relates to corporate events, and the rest relates to non corporate events Normally CBCS collects all of its outstanding receivables Due to the unusual economic conditions in 2021, Chloe fears this year might be different She estimates that 10 of corporate receivables might not be collected and 15 of non corporate receivables might not be collected CBCS has a monthly payroll of $28,000 and pays its employees on the 15th of every month for work done in the previous month The payroll needs to be considered in preparing year end financial statements (ignore payroll taxes) The December 2021 utility bill of $1,250 has not yet been recorded or paid CBCS is subject to income tax and the tax rate is 30 Chloe hired a payroll clerk, who is a very hard worker and did not take vacation in 2021 Employees do not typically report payroll errors, so Chloe does not monitor the payroll clerk closely

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Required: 1. Prepare journal entries 2. Prepare the Statement of Earnings and Statement of Financial Position, for the period ended and as at December 31,

Required:

1. Prepare journal entries

2. Prepare the Statement of Earnings and Statement of Financial Position, for the period ended and as at December 31, 2021

Chloe Bakery and Catering Services (CBCS)

Unadjusted Trial Balance

December 31, 2021

Account name	Debit CAD$	Credit CAD$
Cash	26,400
Accounts Receivable	27,800
Supplies	4,880
Inventory	23,600
Prepaid Insurance	5,760
Land	880,000
Buildings	195,000
Accumulated Depreciation - Buildings		19,500
Furniture	33,600
Accumulated Depreciation - Furniture		6,720
Machinery	28,000
Accumulated Depreciation - Machinery		11,200
Computer	2,500
Accounts Payable		9,600
Deferred Revenue		75,000
Bank Loan Payable, due 2025		580,000
Contributed Capital		60,000
Retained Earnings (January 1, 2021)		166,020
Service Revenue		356,000
Sales Revenue		249,000
Cost of Sales	179,800
Salaries Expense	109,200
Utilities Expense	13,500
Marketing Expense	3,000
	$1,533,040	$1,533,040

Additional information

An annual insurance policy was purchased on October 1, 2021, effective the same day, for $5,760 cash.

A count of supplies was also done on December 31, 2021, where $1,340 worth of supplies was found on hand.

CBCS uses a perpetual inventory system to account for food and other inventories. Below is a breakdown of food inventory on hand at December 31, 2021:

	Cost	Net Realizable Value
Inventory - Raw ingredients	$11,600	$12,400
Inventory - Finished goods	$2,000	$1,800

The company ran out of cake and pastry flour, which is a key ingredient. They placed an order for 50 bags of the flour at a cost $25 each on December 28, 2021. Terms of this order were 2/10, n/30 FOB shipping point. The company received an email notifying them of shipment on December 31, 2021, and it generally takes 7 businesses days to deliver. Chloe looked forward to replenishing stocks and adding them to inventory upon receipt.

CBCS has the following long-lived assets:

	Date of purchase	Depreciation method
Land	January 1, 2019

Buildings	January 1, 2019	Straight-line Estimated useful life 20 years
Furniture	January 1, 2019	Straight-line Estimated useful life 10 years
Machinery	January 1, 2020	Double-declining balance Estimated useful life 5 years
Computer	September 30, 2021	Straight-line Estimated useful life 5 years Residual value $500

Customers must pay a $1,000 non-refundable booking deposit for a catering package provided by CBCS. An analysis of bookings during 2021 indicated that 75 deposits were received and credited to Deferred Revenue. By December 31, 2021, CBCS had provided the service and completed 25 of the 75 bookings.

All sales are done with cash and/or credit card. Cash received from the sales is counted daily and is deposited in the companys bank account at the end of each month. Bank reconciliations are prepared on an annual basis.

A local business made an advance payment of $3,500 to CBCS on December 15, 2021 for an event to be held in March 2022. This amount was credited to Service Revenue at the time of receipt.

CBCS delivered meals worth $1,300 to a customer in October 2021, but has not received the payment and all methods of contacting the customer have been exhausted and the amount has been deemed uncollectible.

Chloe has reviewed the accounts receivable balance and notes that 60% of accounts receivable balance relates to corporate events, and the rest relates to non-corporate events. Normally CBCS collects all of its outstanding receivables. Due to the unusual economic conditions in 2021, Chloe fears this year might be different. She estimates that 10% of corporate receivables might not be collected and 15% of non-corporate receivables might not be collected.

CBCS has a monthly payroll of $28,000 and pays its employees on the 15th of every month for work done in the previous month. The payroll needs to be considered in preparing year-end financial statements (ignore payroll taxes).

The December 2021 utility bill of $1,250 has not yet been recorded or paid.

CBCS is subject to income tax and the tax rate is 30%.

Chloe hired a payroll clerk, who is a very hard worker and did not take vacation in 2021. Employees do not typically report payroll errors, so Chloe does not monitor the payroll clerk closely.