Scenario Zions, Inc. is a small rental company in the Seattle area. The company purchases land and other long-term assets, then rents those assets out to other companies. They used to also rent houses and apartments, but they have found that business clients default less and tend to return items in better shape than private individuals. Zions, Inc.'s accounting staff is usually pretty good at keeping up with transactions, budgeting, and other challenges, but recent trouble in the markets has forced the accounting staff to focus on modeling, internal audits, and investment strategies. So, they have hired you to jump in and finish up the accounting cycle for this year: making the last of the journal entries for the period, posting, creating trial balances, etc. Walk through the different spreadsheets to complete the accounting cycle for the fiscal year ending June 30, 2022. Zions, Inc. has 36,000,000 shares of $2 par value common stock authorized, with 8,993,250 shares outstanding in 2022. Part 1 - Make the necessary journal entries to record the following transactions. In making your entries, use ONLY existing accounts. You can see all of the company's existing accounts in the ledger in Part 2. Also, only the entries that appear in the box below will be graded. 6/21/2022 Collected $5,036,000 in rent. 6/23/2022 Paid $755,000 in legal fees. 6/24/2022 Received $3,777,000 from lawsuit against contractor, an unusual result. 6/28/2022 Purchased a new building for $4,155,000. 6/30/2022 Collected $2,518,000 in rent revenue. Journal Entries 7 Cash Accounts Receivable Land Buildings 8 $16,028,480 9 $3,453,408 $69,068,160 $201,808,530 $6,440,606 $287,784 $12,950,280 $40,361,706 10 $419,685 $863,352 $4,316,760 Accumulated Depreciation $56,578,334 $1,899,374 $4,748,436 $6,475,140 11 $1,107,970 $2,302,272 2 $3.453.408 $402,898 13 $1,932,182 $2,590,056 4 $419,685 $3.453.408 15 $345.341 $1,208,693 16 $7,728,727 $1,151,136 17 $419,685 18 $6,760,046 $345,341 $172,670 19 $419,685 20 $3,864,364 21 $419,685 22 $2,576,242 23 $419,685 24 $2,158,380 Accounts Payable Taxes Payable Loan Payable Notes Payable 25 $419,685 $11,079,700 $4,004,514 $70,507,080 26 $17,062,738 $1,107,970 $6,760,046 $24,441,830 $51,820,930 27 $9,212,002 28 $23,183,879| $2,215,940 $5,539,850 $5,633,372 29 $27,102,058 $24.375.340 80 $419,685 $17,062,738 81 $863.352 $9,212,002 82 $1,438,920 Interest Payable $0 83 $419,685 84 $719,460 35 $4,508,424 86 $419,685 87 $7,084,666 Common stock 38 $419,685 $17,986,500 Additional Paid-In capital $53,959,500 Retained Earnings $51,801,120 Dividends $0 39 $5,152,485 $27,102,058 40 $419,685 41 $1,079,190 42 $8,372,788 43 $1,798,650 44 $5,796,545 45 $2,590,056 Net Revenue 46 $3,885,084 $o Advertising Expense So Bad Debt Expense So Depreciation Expense So 47 $4,186,394 $1,438,920 $1,079,190 $2,590,056 $6,475,140 48 $10,304,969 $2,877,840 $2,158,380 $3,885,084 49 $2,158,380 $7,194,600 $1,438,920 $2,158,380 50 $172,670 $15,828,120 $719,460 51 $330,952 52 $9,870,991 53 54 55 56 57 $920,909 $3,597,300 $719,460 $4,316,760 $21,511,854 $11,511,360 $359,730 $503,622 $2,086,434 $1,798,650 58 59 60 61 52 A B D E F H K M N C Part 2 - All of the transactions for Zions, Inc. have been posted EXCEPT for the entries you just made. Post your journal entries into these t-accounts, then calculate the ending balances. Remember, each account should have only one final debit or credit balance! For ease of grading, please highlight your ending balance in some way (bold, color, under a balance line, etc.). The numbers highlighted in blue are the beginning balances! Legal Fees Expense So $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 $419,685 Property Tax Expense $o Interest Expense So $9,870,991 $920,909 Income Tax Expense So $5,633,372 Loss on Sale of Buildings So $2,518,110 Other Gains So B Part 3 - Create a Trial Balance for Zions, Inc. using the balances 2 from the ledger (or t-accounts) that you just finished. + Keep in mind that the accounts in the trial balance should appear in 5 order: assets, liabilities, equity, revenues, expenses, then gains and 5 losses. Only accounts WITH a balance should be included, with only the final debit or credit balance. 3. Also, make sure you include the totals of each column! If they don't balance, you'll know you need to go back and check your work. 23 456a 7 Zions, Inc. Trial Balance For Year Ended June 30, 2022 A B C Make the necessary adjusting entries to record the following information available at the end of the fiscal period. Please remember that the description accompanying adjusting entries should include sufficient detail that your calculation can be checked by the auditor and duplicated next month. This means that your description should include the actual equation you used to come up with the value used in your journal entry. 1 Part 4- 2 B 4 5 5 7 B 9 0 1 In making your entries, use ONLY existing accounts. You can see all of the company's existing accounts in the ledger in Part 2 2. As with the original entries, only the entries that appear in 3 the box below will be graded. 4 5 6 7 D E F Adjusting Entry Information G H No depreciation has been recorded on the company's Land or new PPE. Zions, Inc.'s accounting staff believes that the Land has a useful life of 30 years with a $6,043,464 salvage value. They also believe that the new PPE has a remaining useful life of 19 years with a $5,650,639 salvage value. When calculating depreciation, keep in mind that Zions, Inc. does not use partial year depreciation. They record a full year of depreciation, regardless of when an asset was purchased. HINT: New PPE is the amount added this year, and is shown as the debit below the beginning balance of the Buildings account! Zions, Inc. recorded and paid interest on all of their outstanding notes 3 months ago. Payments are due on the notes every 6 months, and the interest rate on both notes is 15.5% (they were issued by the same bank with the same terms, just 2 years apart). Unlike the federal government, the state where Zions, Inc. does business charges property taxes instead of an income tax. These taxes are charged on an assessed market value assigned by the government for tax purposes; the assessed value does not match what Zions, Inc. actually paid for the assets. In fact, the assessed value comes out to 57% of the book value (historical costs accumulated deprecation, if any) of the company's land owned at the end of the fiscal year. The property tax rate for 2022 is 6%. The taxes will be paid when they are due on September 1, 2022. A B C D E F G H K 1 Part 5 - Create an Adjusted Trial Balance for Zions, Inc. that 2 includes the values from your adjusting entries. 3. 4 In updating your account balances from the trial balance you may 5 either directly adjust the accounts from your Trial Balance OR 6 update the accounts in your ledger (or t-accounts). Either way is 7 fine, as long as you highlight and label the adjusted balances in B your ledger so that they are separate from the original balances. Please choose the method that makes the most sense to you as you walk through the accounting cycle. 9 0 1 2 Keep in mind that the accounts in the trial balance should appear in the same order as the trial balance: assets, liabilities, equity, revenues, expenses, and then gains and losses. Only accounts WITH a balance should be included, with only the final debit or credit balance. Also, make sure you include the totals of each column! If they don't balance, you'll know you need to go back and check your work. Part 6 (Extra Credit) - Create a multi-step Income Statement in good form for Zions, Inc. using the balances from your adjusted trial balance. Make sure that your final statement includes all of the essential elements we have discussed for the Income Statment, including an appropriate header and EPS. A Part 7 (Extra Credit) - Create a Balance Sheet in good form for Zions, Inc. using the balances from your adjusted trial balance and income statement. Make sure that your final statement includes all of the essential elements we have discussed for the Balance Sheet. You do NOT need to create a Statement of Retained Earnings, but you may do so if it helps you get your Balance Sheet to balance. A Part 7 (Extra Credit) - Create a Balance Sheet in good form for Zions, Inc. using the balances from your adjusted trial balance and income statement. Make sure that your final statement includes all of the essential elements we have discussed for the Balance Sheet. You do NOT need to create a Statement of Retained Earnings, but you may do so if it helps you get your Balance Sheet to balance