The Golf Shop, owned by Alex Mikhale, sells tennis equipment. The shop has the fiscal year ended as at August 31" and uses a perpetual inventory system with the first in, first out method. On August 1", 2021, the company had the following balances in its general ledger: The Golf Shop Trial Balance July 30, 2021 Accounts Debit Credit Cash 180,000 Accounts Receivable 300,000 Allowance for Doubtful Debts 20,000 Prepaid Insurance (12-month insurance) 50,000 Inventory (1,000 units @ $225) 225.000 Building 600,000 Accumulated Depreciation - Building 50,000 Equipment 240,000 Accumulated Depreciation - Equipment 45,000 Land 700.000 Goodwill 85,000 Patents 80,000 Accumulated Amortization - Patents 4,000 Accounts Payable 327,000 Uncarned Revenue 25,000 Note payable 360,000 Share Capital ($10 par) 960,000 Retained Earnings 362,505 Sales 1,233,720 Sales Returns & Allowances 25,000 Sales Discount 20,000 Amortization Expense 400 Costs of goods sold 625,000 Depreciation Expense - Building 40,000 Depreciation Expense - Equipment 26,500 Interest Expense 22.250 Insurance Expense 8,650 Rent Expense 28,600 Utility Expense 10,825 Salaries Expense 120,000 Total 3.387.225 s 3.387.225 1 During August, the last month of the fiscal year, the company had the following transactions: Aug. Paid $15,500 for August's rent in cash. 1 Purchased building for $120,000 with estimated useful life of 40 years and no scrap value. The Golf Shop applies the straight-line depreciation method for all fixed assets. 2 5 Paid $50,000 owing on account (make a payment to the supplier). 4 Sold 850 units of inventory with the price of $338 per unit for cash. 5 Purchased 1,200 units of inventory for $288,000 terms 5/10 net 30 and import directly to the warehouse The Golf Shop paid freight charges of $1,200 for Aug 5'h transaction. 10 Paid to the supplier for the inventory purchased at the Aug 5* transaction. 11 Sold 700 units of inventory with a price of $342 per unit on account to Nanogen Company, terms 2/10, n/30, FOB shipping point. 15 Paid salaries, $35,000 in cash. 17 Nanogen Company paid the amount owing. 19 A. Mikhael took out $100,000 cash for personal use to fund his purchase of the Mercedes G63 White to catch up with the viral trend on the Internet. 21 Paid postage $500, Miscellaneous $800, Entertainment $370 in cash. 23 Sold equipment with an original cost of $60,000 for $22,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. 24 Received $3,420 cash in advance from customers for merchandise to be delivered in September. 26 Wrote off uncollectible account $5,000. 29 Paid $5,200 for advertising in cash. 31 Collected $7,750 in cash from past accounts receivable (Collected cash from outstanding customers) Instructions: (a) Create T-accounts for each of the above accounts and enter the August 1" balances (b) Prepare Journal entries for the August transactions (c) Post the transactions (transfer from joumal to the T-accounts) (d) Prepare a Trial Balance at August 31" (e) Journalize and post the following adjusted entries: 1. Three months of the 12-month insurance policy have expired on Aug 31* 2. The depreciation/amortization expense for the month as follows: $4,500 for building, except for the new building purchased on August 1" $3,500 for equipment. $3,000 for patents 3. The note payable has an annual interest rate of 6,5%. Two months of interest have incurred but no entries had been made to record the interest expenses on August 31" 4. Of the note payable, $6,000 must be paid on December 1 cach year 5. An analysis of the Unearned Sales Revenue account shows that $3,420 has been earned by August 31". A related $2,290 for cost of goods sold will also need to be recorded for these sales. 6. Salaries eamed but not paid at August 31" total $30,080 7. Recorded bad debts expense based on the aging of accounts receivable with the target balance of $21,100. () Prepare an Adjusted Trial Balance at August 31" (2) Prepare an Income Statement, Statement of Owner's Equity, and Classified Balance Sheet (Note: account balances in the T-accounts will change after step (e) (h) Record and post-closing entries (i) Prepare a post-closing trial balance on August 31% The Golf Shop, owned by Alex Mikhale, sells tennis equipment. The shop has the fiscal year ended as at August 31" and uses a perpetual inventory system with the first in, first out method. On August 1", 2021, the company had the following balances in its general ledger: The Golf Shop Trial Balance July 30, 2021 Accounts Debit Credit Cash 180,000 Accounts Receivable 300,000 Allowance for Doubtful Debts 20,000 Prepaid Insurance (12-month insurance) 50,000 Inventory (1,000 units @ $225) 225.000 Building 600,000 Accumulated Depreciation - Building 50,000 Equipment 240,000 Accumulated Depreciation - Equipment 45,000 Land 700.000 Goodwill 85,000 Patents 80,000 Accumulated Amortization - Patents 4,000 Accounts Payable 327,000 Uncarned Revenue 25,000 Note payable 360,000 Share Capital ($10 par) 960,000 Retained Earnings 362,505 Sales 1,233,720 Sales Returns & Allowances 25,000 Sales Discount 20,000 Amortization Expense 400 Costs of goods sold 625,000 Depreciation Expense - Building 40,000 Depreciation Expense - Equipment 26,500 Interest Expense 22.250 Insurance Expense 8,650 Rent Expense 28,600 Utility Expense 10,825 Salaries Expense 120,000 Total 3.387.225 s 3.387.225 1 During August, the last month of the fiscal year, the company had the following transactions: Aug. Paid $15,500 for August's rent in cash. 1 Purchased building for $120,000 with estimated useful life of 40 years and no scrap value. The Golf Shop applies the straight-line depreciation method for all fixed assets. 2 5 Paid $50,000 owing on account (make a payment to the supplier). 4 Sold 850 units of inventory with the price of $338 per unit for cash. 5 Purchased 1,200 units of inventory for $288,000 terms 5/10 net 30 and import directly to the warehouse The Golf Shop paid freight charges of $1,200 for Aug 5'h transaction. 10 Paid to the supplier for the inventory purchased at the Aug 5* transaction. 11 Sold 700 units of inventory with a price of $342 per unit on account to Nanogen Company, terms 2/10, n/30, FOB shipping point. 15 Paid salaries, $35,000 in cash. 17 Nanogen Company paid the amount owing. 19 A. Mikhael took out $100,000 cash for personal use to fund his purchase of the Mercedes G63 White to catch up with the viral trend on the Internet. 21 Paid postage $500, Miscellaneous $800, Entertainment $370 in cash. 23 Sold equipment with an original cost of $60,000 for $22,000. The original estimated useful life of it was 5 years with no scrap value and it had been used for 18 months. 24 Received $3,420 cash in advance from customers for merchandise to be delivered in September. 26 Wrote off uncollectible account $5,000. 29 Paid $5,200 for advertising in cash. 31 Collected $7,750 in cash from past accounts receivable (Collected cash from outstanding customers) Instructions: (a) Create T-accounts for each of the above accounts and enter the August 1" balances (b) Prepare Journal entries for the August transactions (c) Post the transactions (transfer from joumal to the T-accounts) (d) Prepare a Trial Balance at August 31" (e) Journalize and post the following adjusted entries: 1. Three months of the 12-month insurance policy have expired on Aug 31* 2. The depreciation/amortization expense for the month as follows: $4,500 for building, except for the new building purchased on August 1" $3,500 for equipment. $3,000 for patents 3. The note payable has an annual interest rate of 6,5%. Two months of interest have incurred but no entries had been made to record the interest expenses on August 31" 4. Of the note payable, $6,000 must be paid on December 1 cach year 5. An analysis of the Unearned Sales Revenue account shows that $3,420 has been earned by August 31". A related $2,290 for cost of goods sold will also need to be recorded for these sales. 6. Salaries eamed but not paid at August 31" total $30,080 7. Recorded bad debts expense based on the aging of accounts receivable with the target balance of $21,100. () Prepare an Adjusted Trial Balance at August 31" (2) Prepare an Income Statement, Statement of Owner's Equity, and Classified Balance Sheet (Note: account balances in the T-accounts will change after step (e) (h) Record and post-closing entries (i) Prepare a post-closing trial balance on August 31%