Sapphire Gems and Minerals Co Ltd - Tourmaline Division Trial Balance as of December 31, 2022

The following additional information is available December 31, 2022:

1) Store Supplies on hand on December 31, 2022, amounted to $350,000.

2) Insurance of $5,850,000 was paid on January 1, 2022, for the 18-months to June 30, 2023

3) Prepaid rent expired December 31, 2022, amounted to $1,110,000.

4) The furniture and equipment have an estimated useful life of 10 years and is being depreciated on the straight-line method down to a residual value of $100,000.

5) The motor truck cost relates to two Livi Trucks purchased for $1,300,000 each by the company on January 1, 2016. The double-declining balance method of depreciation is used to compute the trucks depreciation charges and their expected useful life is 10 years or 100,000 miles. In 2016, 15,000 miles were driven, 18,500 in 2017, 15,600 in 2018, 17,000 in 2019, 14,500 in 2020, 10,800 in 2021 and 12,800 in 2022. The residual value on both truck is $272,630 each. On July 1, 2022, the company sold one of the trucks to Daley Company for $480,000 on credit. Round off answers to the nearest dollar.

6) Salaries earned by employees and not yet paid amounted to $1,500,000 on Dec 31, 2022.

7) Accrued interest expense as of December 31, 2022, $220,000.

8) On Dec 31, 2022, $875,000 of the previously unearned sales revenue had been earned.

9) The aging of the Accounts Receivable schedule on Dec 31, 2022, indicated that the Allowance for Bad Debts should be $359,000.

10) A physical count of inventory was done on December 31, 2022, after making all the other adjustments and this revealed that there was $8,450,000 worth of inventory on hand at this point.

Other data:

11) The business is expected to make principal payments totalling $550,500 towards the loan during the fiscal year to December 31,2023 Required:

a) Prepare the necessary adjusting journal entries on Dec 31, 2022.

b) Prepare the Adjusted Trial balance for the period ending December 31, 2022.

c) Prepare the following financial statements for the division:

A Multiple-step income statement & a Statement of owners equity for the year ended December 31, 2022

A Classified balance sheet, in report format, at December 31, 2022.

\begin{tabular}{|l|r|r|} \hline & \multicolumn{1}{|c|}{ DR } & \multicolumn{1}{|c|}{ CR } \\ \hline \hline Cash & 3,950,000 & \\ \hline Accounts receivable & 3,590,000 & \\ \hline Allowance for bad debt & & 300,000 \\ \hline Other debtors & 8,400,000 & \\ \hline Merchandise Inventory & 500,000 & \\ \hline Store Supplies & 5,850,000 & \\ \hline Prepaid Insurance & 1,554,000 & \\ \hline Prepaid rent & 8,800,000 & \\ \hline Furniture \& Equipment & & 3,480,000 \\ \hline Accumulated deprecation-Furniture and equipment & 2,600,000 & \\ \hline Motor Truck & & 1,918,426 \\ \hline Accumulated depreciation- Motor Truck & & 330,000 \\ \hline Accounts payable & & \\ \hline Salary payable & & \\ \hline Interest payable & & \\ \hline Unearned Sales revenue & & 1800,000 \\ \hline Note Payable, long term & 65,500,000 \\ \hline Capital & & \\ \hline Withdrawals & 655,500 & \\ \hline Sales revenue & 655,500 & \\ \hline Sales discount & 10,500,000 & \\ \hline Sales returns and allowances & 8,500,000 & \\ \hline Cost of goods sold & & \\ \hline Salaries expense & 690,000 & \\ \hline Insurance Expense & & \\ \hline Utilities Expense & & \\ \hline Rent Expense & & \\ \hline Depreciation Expense - Furniture and Equipment & \\ \hline Depreciation Expense - Motor truck & & \\ \hline Store Supplies Expense & & \\ \hline Gain/loss on Disposal of Fixed Asset & & \\ \hline Bad-Debt Expense & & \\ \hline Interest Expense & & \\ \hline & & \\ \hline \end{tabular}