Sample Question: Complex Category

Pool Corporation is the worlds largest wholesale distributor of swimming pool supplies and equipment & services. It sells these products to swimming pool repair and service businesses like Pennys Pool Service & Supply Inc., swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family-owned businesses like Pennys. Its trial balance for the last year ended December 31, 2019 is presented below:

Account Titles		Debit			Credit
Cash and cash equivalents	$	560,000
Accounts receivable		65,000
Supplies		25,000
Product inventory		125,000
Prepaid insurance		20,000
Equipment		143,000
Other non-current assets, net		2,000
Accumulated depreciation				$	21,000
Accounts payable					25,000
Interest payable					0
Rent payable					0
Wages payable					7,000
Property tax payable					12,000
Long term notes payable					30,000
Capital					500,000
Retained earnings					345,000
	$	940,000		$	940,000

The following transactions occurred during the financial year 2020: a. A retail pool customer pays his outstanding balance of $10,000 to Pool Corporation. b. Supplies purchased in Cash amounting $380. c. Pool Corporation purchases Product Inventory in Cash amounting to $3,200. d. Paid wages in cash amounting to $8,000. e. Pool Corporation purchased equipment worth $6,000 and paid immediately. f. Pool Corporation paid $2,400 cash for the premium on a 12th month insurance policy beginning from December 2020. g. Pool Corporation paid $200 towards general repairs in cash. h. Pool Corporation paid $3,600 cash towards Utilities. i. Pool Corporation paid $130 towards transportation for one of the equipment as per the sale agreement. j. Pool Corporation purchased Product Inventory for $31,000 Cash. k. Pool Corporation owed $900 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. l. 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. Pool Corporation received a $480 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 customers pool for $12,000, 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. q. During 2020, Pool Corporation purchased supplies costing $23,000 from various suppliers for cash. 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 $48,000 of goods and received the amount on the same day. v. Record the expired insurance purchased (trans. f) for the month of December. w. Sales worth $27,000 made to Pennys Pool Service & Supply Inc. on Credit. x. Pool Corporation received utilities bill for $510 for December. Paid in cash when received. y. Property tax paid $9,900 during the year. z. Received partial payment from Pennys Pool Service & Supply Inc amounting to $13,500 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 Pennys Pool Service & Supply Inc. (trans "w") c3. Paid for the equipment purchased. (tran. A1) d4. On December 31, 2020, Pool Corporation had $24,000 of pool cleaning supplies on hand. Record the necessary adjusting entry. e5. Property tax due and payable worth $12,000. e6. Recognize revenue earned (transaction L) e7. Record interest accrued on bank loan (Transaction N). e8. Record the adjusting entry to record expired insurance (Transaction P).

Required:

1. Post the required entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Post the entries and their balances to their respective T-accounts.

3. Prepare Adjusted Trial Balance.

4. Prepare Income Statement.

5. Prepare Statement of Owner's Equity.

6. Prepare Balance Sheet. (Input all amounts as positive values.)

7. Post the closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)