The following information pertains to Coughlans Flowers Inc., a corporation owned by Ms. Elizabeth Coughlan. The company opened for business in 2009. Coughlans uses the cash basis of accounting during the year. Each year, at year end, the companys CPA, Heather McDonald, converts the cash basis books to the accrual basis. The results of any adjustments made on 12/31/17 and any reversing entries made on 1/2/18 are reflected in the unadjusted trial balance below.

Coughlans Flowers
Unadjusted trial Balance
December 31, 2017
			Dr.	Cr.
Cash			$125,600
Investments Accounts receivable, 12/31/16			300,000 116,200
Allowance for doubtful accounts, 12/31/16				$20,000
Inventory, 12/31/16			62,000
Furniture and Fixtures			118,200
Accumulated depreciation, Furniture & Fixtures 12/31/16				32,400
Accounts payable, 12/31/16				42,000
Capital stock, $10 par value				50,000
Retained earnings, 12/31/16				242,000
Sales				1,549,100
Notes payable 4%, due 3/31/18				200,000
Purchases			906,600
Fencing expense			80,000
Salaries expense			262,000
Income tax expense			45,000
Interest expense				6,000
Insurance expense			34,100
Rent expense			34,200
Utilities expense			12,600
Freight in			15,000
Freight out			17,000
Travel expense			13,000
TOTALS			$2,141,500	$2,141,500

Ms. Coughlan has developed plans to expand into the wholesale flower market and is in the process of negotiating a bank loan with Bridgewater Savings Bank to finance the expansion. The bank is requesting financial statements prepared on the accrual basis of accounting for 2017 from the company. During the course of his review engagement, Heather McDonald, CPA, obtained the following information:

1. Amounts due from customers totaled $175,000 at 12/31/2017.

2. In analyzing amounts due from customers at 12/31/2017, McDonald discovers that Coughlans has a $6,000 receivable more than 9 months overdue from Jims Retail Store. McDonald discovers that Jims filed for bankruptcy on 12/02/2017 and determines that it is highly unlikely that Coughlans will recover any of the $6,000 and that the amount should be written off.

3. A further analysis and aging of accounts receivable at 12/31/2017 shows approximately $18,000 of potential uncollectible accounts other than the Jims Retail Store account.

4. Unpaid invoices for flower purchases totaled $42,000 at 12/31/2016 and $54,000 at 12/31/2017.

5. Based on a physical count, the inventory at 12/31/2017 was valued at $65,000.

6. On May 1, 2017, Coughlans paid $26,100 to renew its comprehensive insurance coverage for one year. The premium on the previous one year policy, which expired on April 30, 2017, was $24,000. The company made the appropriate adjusted entry on 12/31/2016, which was subsequently reversed on 1/2/2017.

7. Coughlans installed new fencing around the perimeter of the property. The installation was completed on 6/28/2017 at a cost of $80,000. Coughlan estimates the useful life of the fencing to be 20 years. Coughlan uses straight-line depreciation.

8. In reviewing the cash receipts journal, McDonald discovers that a piece of furniture purchased on 6/30/2014 for $25,000 being depreciated using the straight-line method with an estimated salvage value of $5,000 and a useful life of 5 years, was sold on March 31, 2017 for $6,000 cash. Unfamiliar with the proper accounting, the bookkeeper debited cash and credit sales for the receipt of the $6,000.

9. The note payable was taken out on 4/1/2016. A proper accrual was made at 12/31/16 and the entry was reversed at 1/2/2017. All principal and interest are due at maturity.

10. On November 15, 2017, one of Coughlans delivery drivers was in an accident with another vehicle. Unfortunately, the driver had a few beers at lunch and was cited for impaired driving. The company is being sued for $200,000. The first court date has been scheduled for Feb. 15, 2018. Coughlans attorney advises her to settle at the time. The estimated settlement will be between $125,000 and $175,000.

11. All employees are paid weekly on Friday. The average payroll is $5,000 weekly for a 6 day work week. Employees were last paid on 12/29/2017 for the week ended 12/23/2017. Because Coughlan is Canadian, her policy is to give all employees paid holidays for Christmas Day and the following day, which is known as Boxing Day in Canada. This will be reflected in the paychecks distributed on 1/5/2018.

12. Coughlans has made estimated tax payments of $15,000 per quarter for the first three quarters of 2016. Coughlans tax rate is 35% of pretax income.

The investments account is comprised of two investments. One $200,000 bond was purchased at face value and Coughlan intends to hold until it matures. The interest on these bonds are 3% and is paid annually on January 31. Coughlan purchased these bonds on September 1^stof the current year. The fair value of these bonds are $96,000. The other investment are shares of Google stock, which were purchased years ago when Google was selling at $100/share. Assume the closing price of Google on 12/31/17, was $1,046/share.

Required:

a. Prepare a 10 column worksheet to convert the trial balance of Coughlans Flowers to the accrual basis of accounting for the year ended December 31, 2017. Use the numbers given with the additional information (1-13) to cross-reference the postings in the adjustments column of the worksheet. The cash basis trial balance should appear in the first set of columns on your worksheet.

b. Prepare a separate worksheet showing your adjusting entries (relating the numbers to the adjustments in the worksheet). Show any computations.

c. Prepare accrual basis financial statements for 2017 (multiple-step income statement, classified balance sheet, and statement of retained earnings) in good form. A cash flow statement is not required.