Sample Question: Complex Category Pool Corporation is the world's largest wholesale distributor of swimming pool supplies and equipment & services. It sells these products to swimming pool repair and service businesses like Penny's Pool Service & Supply Inc., swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family-owned businesses like Penny's. Its trial balance for the last year ended December 31, 2019 is presented below: Credit Account Titles Cash and cash equivalents Account Receivables Supplies Product inventories Prepaid Insurance Equipments Other non-current assets, net Accumulated Depreciation Accounts payable Wages payable Property tax payable Long term notes payable Capital Retained earnings, January 1 Debit $1,382,650 110,555 25,400 500,000 78,000 110,994 30, 386 $ 16,650 114,740 50,800 94,719 34,000 1,172,550 754,526 $2,237,985 $2,237,985 The following transactions occurred during the financial year 2020: a. A retail pool customer pays his outstanding balance of $1,000 to Pool Corporation. b. Supplies purchased in Cash amounting $550. c. Pool Corporation purchases Product Inventory in Cash amounting to $5,000. d. Wages paid amounting to $8,000. e. Pool Corporation purchased equipment worth $5,000 and paid immediately. f. The company paid $2.400 cash for the premium on a 12th month insurance policy beginning from December 2020. uyu Puig Willy e. Pool Corporation purchased equipment worth $5,000 and paid immediately. f. The company paid $2,400 cash for the premium on a 12th month insurance policy beginning from December 2020. g. Pool company paid $200 towards general repairs in cash. h. The company paid $300 cash towards Utilities. i. Pool Company paid $120 towards transportation for one of the equipment as per the sale agreement. j. Company purchased Equipments (product Inventory) for sale amounting to $25,000 and paid in Cash. k. Pool corporation owed $800 wages to the office receptionist and three assistants for working the last two days in December 2020. The employees will be paid in January 2021. 1. On October 1, 2020, Pool Corporation received $24,000 from customers who prepaid pool cleaning service for one year beginning on November 1, 2020. m. The company received a $520 utility bill for December utility usage. It will be paid in January 2021. n. Pool Corporation borrowed $30,000 from a local bank on May 1, 2020, signing a note with a 6 percent interest rate. The note and interest are due on May 1, 2021. o. On December 31, 2020, Pool Corporation cleaned and winterized a customer's pool for $1,200, but the service was not yet recorded on December 31. p. On August 1, 2020, Pool Corporation purchased a two-year insurance policy for $4,200, with coverage beginning on that date. The amount was recorded as prepaid insurance when paid. q. On December 31, 2020, Pool Corporation had $3,100 of pool cleaning supplies on hand. During 2020, Pool Corporation purchased supplies costing $23,000 from ABC Corporation, had $2,400 of supplies on hand on December 31, 2019. r. Pool Corporation estimated that depreciation on its buildings and equipment was $8,300 for the year. s. At December 31, 2020, $1,500 of interest on investments was earned that will be received in 2021. t. Rent for December due to be paid in January 2020 of $2,000. u. Sold $50,000 of goods and received the amount on the same day. v. Record the expired insurance purchased (trans. f) for the month of December. w. Sale of worth $20,000 made to Penny's Pool Service & Supply Inc. on Credit. x. The company paid $500 cash towards Utilities. y. Property tax paid $10,000 during the year. z. Received partial payment from Penny's Pool Service & Supply Inc amounting to $10,000 for the purchase made this year. (tras."w") a1. Pool Corporation purchased equipment worth $5,000 on credit basis. b2. Pool Corporation received the remaining balance amount due towards the recent sale made to Penny's Pool Service & Supply Inc. (trans "w") c3. Paid for the equipment purchased. (tran. A1) d4. Supplies purchased in Cash amounting $550 at the end of December 2020. CD-anak.taud Llannn a1. Pool Corporation purchased equipment worth $5,000 on credit basis. b2. Pool Corporation received the remaining balance amount due towards the recent sale made to Penny's Pool Service & Supply Inc. (trans "w") c3. Paid for the equipment purchased. (tran. A1) d4. Supplies purchased in Cash amounting $550 at the end of December 2020. e5. Property tax due and payable worth $13,000. e6. Recognize revenue earned (transaction L) Answer is not complete. No Transaction Debit Credit 1 a General Journal Cash Account receivables 1,000 1,000 N b 550 Supplies Cash 550 3 C 5,000 Product inventories Cash 5,000 4 8,000 Wages expenses Cash 8,000 5 e 5,000 Equipments Cash 5,000 6 f 2,400 Prepaid insurance Cash 2,400 7 g 200 Repairs Cash 200 8 h Utilities 300 Cash 300 8 h Utilities 300 Cash 300 9 i 120 Transportation expenses Cash 120 10 j 25,000 Product inventories Cash 25,000 11 k 800 Wages expenses Wages payable 800 12 24,000 Cash and cash equivalents Deferred revenue 24,000 13 m 520 Utilities expense Utilities payable 520 15 O 1,200 Account receivables Sales 1,200 16 4,200 X Insurance expense Prepaid insurance 4,200 17 q 22,300 Supplies expense Supplies 22,300 Supplies 22,300 18 r 8,300 Depreciation expense Accumulated depreciation 8,300 19 S 1,500 Interest receivable Interest revenue 1,500 20 t 2,000 Rent expense Rent payable 2,000 21 u 50,000 Cash Sales 50,000 22 V 200 Insurance expense Prepaid insurance 200 23 w 20,000 Account receivables Sales 20,000 24 500 Utilities expense Utilities payable 500 25 10,000 Property tax expenses Cash and cash equivalents 10,000 22 v 200 Insurance expense Prepaid insurance OU 200 23 w 20,000 Account receivables Sales 20,000 24 500 Utilities expense Utilities payable 500 25 10,000 Property tax expenses Cash and cash equivalents 10,000 26 Z 10,000 Cash and cash equivalents Account receivables 10,000 27 a 1 5,000 Equipments Accounts payable 5,000 28 b2 Cash 20,000 Account receivables 20,000 2. Post the entries and their balances to their respective T-accounts. Answer is not complete. Beg. bal. Beg. bal. a. Account Receivables 110,555 1,000 a. 20,000 10,000 z 0. 1,200 W. b2 Cash and Cash equivalents 1,382,650 1,000 550 b. 5,000 c. 8.000 d. 5,000 e e. f. 200 g 300 h. 120 li. 25,000 i. End. bal. 120,755 500 x 10,000 y. 5,000 c3 550d4. End. bal. 1,323,430 Supplies 25,400 Beg. bal. Beg. bal. Product inventories, net 500,000 5,000 25,000 22,300 q C. b. 550 O Do i Ida 550 Supplies 25,400 Beg. bal. Beg. bal. Product inventories, net 500,000 5,000 25,000 22,300 q C. b. 550 i. d4. 550 End. bal. 4,200 End. bal. 530,000 Prepaid Insurance 78,000 2,400 Beg. bal. f. Beg. bal. Equipments 110,994 5,000 5,000 200 v e. 875 a1. End. bal. 79,325 End. bal. 120,994 Other non-current assets, net 30,386 Beg. bal. Accounts payable 114,740 5,000 5,000 Beg. bal. a1. c3. End. bal. 30,386 114,740 End. bal. Interest payable Rent payable Beg. bal. Beg. bal. 1,200 2,000 t. 1 ann End hal 2 on Cndhol Interest payable Rent payable Beg. bal. Beg. bal. 1,200 2,000 t. 1,200 End. bal. 2,000 End. bal. Wages payable 50,800 800 Beg. bal. k. Property tax payable 94,719 13,000 Beg. bal. e5. 51,600 End. bal. 107,719 End. bal. Capital Long term notes payable 34,000 Beg. bal. 1,172,550 Beg. bal. 34,000 End. bal. 1,172,550 End. bal. Supplies expense Retained earnings, January 1 754,526 Beg. bal. Beg. bal. q 22,300 754,526 End. bal. End. bal. 22,300 Depreciation expenses Sales Beg. bal. Beg. bal. r. 8,300 0. >> u. 1,200 50,000 20,000 4,000 w. 8,300 End. bal. 75,200 End. bal. Deferred revenue Accumulated depreciation Beg. bal. Beg. bal. 8,300 r. End. bal. 8,300 End. bal. Wages expenses Insurance expenses Beg. bal. Beg. Bal. End. bal. End. Bal. Rent expenses Interest revenue Eru. bai. Enu. bal. Rent expenses Interest revenue Beg. bal. Beg. bal. End. bal. End. bal. Interest receivable Repair expenses Beg. bal. Beg. bal. End. bal. End. bal. Transportation expense Utilities payable Beg. bal. Beg. bal. End. bal. End. bal. Interest expense Utilities expenses Beg. bal. Beg. bal. End. bal. End. bal. Interest expense Utilities expenses Beg. bal. Beg. bal. End. bal. End. bal. Property tax expenses Beg. bal. End. bal. Credit 24,950 Answer is not complete. Pool Corporation Adjusted trial balance For year ended December 31, 2020 Account Title Debit Cash and cash equivalents Account receivables Product inventories 530,000 Prepaid insurance Equipments 120,994 Accumulated depreciation Other non-current assets, net 30,386 Accounts payable Interest payable Rent payable Wages payable Property tax payable Utilities payable Deferred revenue Long term notes payable Capital Retained earnings, January 1 Sales Depreciation expenses 8,300 Supplies expense 22,300 114,740 1,200 2,000 51,600 107,719 520 20,000 1,172,550 754,526 75,200 Wanne aynoncee Rann 20,000 1,172,550 754,526 75,200 Deferred revenue Long term notes payable Capital Retained earnings, January 1 Sales Depreciation expenses Supplies expense Wages expenses Insurance expenses Rent expenses Repair expenses Transportation expense Utilities expenses Property tax expenses Interest expense Interest revenue Interest receivable Supplies 8,300 22,300 8,800 1,075 2,000 200 120 1,320 23,000 1,200 1,500 1,500 4,200 Total $ 755,395 $ 2,326,505 4. Prepare Income Statement. Answer is not complete. Pool Corporation Income Statement For year ended December 31, 2020 Revenue: Sales 0 Expenses: Supplies expense Repair expenses Property tax expenses Depreciation expenses 200 8,300 8,500 (8,500) $ 5. Prepare Statement of Owner's Equity. Answer is not complete. Pool Corporation Statement of Owner's equity For year ended December 31, 2020 Capital $ 1,172,550 Add: Net income Add: Retained earnings 0 Ending $ 1,172,550 6. Prepare Balance Sheet. (Input all amounts as positive values.) Answer is not complete. Pool Corporation Balance Sheet For year ended December 31, 2020 Assets Current Assets Cash and cash equivalents Account receivables 530,000 Product inventories Supplies $ 530,000 Total Current Assets Non-Current Assets $ 0 Total Non-Current Assets Total Assets Liabilities $ 530,000 Prant Ilahilline $ $ 530,000 Total Non-Current Assets Total Assets Liabilities Current Liabilities Wages payable Accounts payable 51,600 $ 51,600 Total Current Liabilities Non-Current Liabilities Long term notes payable $ 34,000 $ 34,000 85,600 $ Total Non-Current liabilities Total Liabilities Owner's Equity Capital Retained earning $ 1,172,550 >> $ 1,172,550 Total Owner's Equity Total Liabilities & Equity $ 1,258,150 Journal entry worksheet Record the transfer of net income to retained earnings account. Note: Enter debits before credits. Transaction General Journal Debit Credit 3 Record entry Clear entry View general Journal