The London Tour Company (LTC) organizes tours of scenic and historic places of interest for visitors and new resi- dents of London, Ontario. The company was started by Andrew Zhang after he moved to London from Chongqing, China. It has an April 30 year end and uses ASPE. After a successful first year, Andrew is eager to find out how his business did in May 2020, the first month of his second year. He has asked you to create financial statements and has also informed you that the bank will require copies of the statements as part of the conditions of a bank loan obtained in May 2020 Andrew has provided you with a trial balance at April 30, 2020 (Exhibit 1). Additional information about LTC is found in Exhibit 11. Andrew has asked you to prepare the financial statements for May 2020 for his own use and for use by his bank. He would like you to provide a copy of all of your T accounts so that he can get a good idea of how his business is doing. He has reminded you that his income tax rate is 30%. ASPE was used for the first year of business, but now Andrew wonders if this is still appropriate as the business grows and adds extemal users. Please provide your very best work. so that Andrew will be impressed and will ask you to do his financial statements again next month, Required Prepare the financial statements according to Andrew's instructions. Echibiti Trial Balance London Tour Company Trial Balance April 30, 2020 Debit Credit Cash Accounts receivable Supplies Prepaid insurance Furniture $18,200 6,630 5,240 750 5,000 $ 1,000 f. Required Prepare the financial statements according to Andrew's instructions Exhibiti Trial Balance London Tour Company Trial Balance April 30, 2020 Debit Credit Cash Accounts receivable $18,200 6,630 5,240 750 5,000 $ 1,000 8,000 Supplies Prepaid insurance Furniture Accumulated depreciation--furniture Equipment Accumulated depreciation-equipment Accounts payable Unearned service revenue Capital shares, A. Zhang Retained earnings 4,000 6,400 1,900 20,000 10,520 $43,820 $43,820 Exhibit 11 Additional Information Operating Expenses had not yet paid by the end of May. All customers who owe London Andrew has two tour guides who work for him. Each guide is paid Tour Company money at the end of each month pay in full during S500 wages per week for working five days. Monday through the following month. Friday. Payment is made on Friday each week. During May. Andrew Some groups request special tours that they pay for in advance. paid $3,600 for wages. Assume that May 31 was on a Tuesday and On May 25, one group paid cash for a special tour for 50 people at that the employees have worked for two days for which they have $150 cach. The tour will take place on June 7. All revenue that is not not yet been paid camned by the end of each month is camed in the following month Supplies were purchased on account on May 10 for $800. A 12 month insurance policy had been purchased for $1.800 on Capital Assets September 30, 2019. Andrew pays $1.000 cash each month for Office furniture had been purchased on May 1, 2019, when Andrew office rent. In May 2020, he made an additional payment of $500 first started his business. The furniture is cxpected to have a residual to rent extra space for June 2020. He knew that he would need extra value or S500 and double declining balance is used for depreciation. space because of the large number of tourists who would be in Lon Andrew uses special double-decker tour buses to conduct bis tours. In the past, he always rented busses, but on May 1, 2020, he Andrew pays 550 per month for basie telephone services. This decided to purchase his own bus at a cost of $35.000. An additional covers up to 600 minutes per month of cell phone use, Extra charges 55.000 was paid to the dealer for customization of the bus, Andrew of 0.05 per minute apply if Andrew uses more minutes. On June 2 paid $10.000 cash and signed a one-year 44 note payable for the Andrew received the May invoice for 700 minutes. Payment is due rest of the cost. Interest and principal are due on April 30, 2021. A on June 28 a condition of the loan, the bank requires monthly financial state On May 10, Andrew pald the accounts payable balance fromments. LTC will use the bus for five years and wil trive it an April 30. On that day, he also withdrew a personal salary of $5,000 expected 175,000 km. In May 2020. it was driven 3.000 km. The bus from the business. At the end of May. S1.200 of unused supplies has a residual value of $5.000. Depreciation is based on the number were still on hand of kilometers driven LTC also uses video equipment to record the tours it conducts. Operating Revenue Andrew gives customers a copy of the video at the end of the tour so Andrew charges $100 per person for cach tour. This includes a full that they can remember their fun day. On May 1, Andrew traded in hit anime hentar vinment with In The don in June purchase HR OWN Daf arom covers up to 600 minutes per month of cell phone use. Extra charges $5,000 was paid to the dealer for customization of the bus. Andrew of 0.05 per minute apply if Andrew uses more minutes. On June 2. paid $10,000 cash and signed a one-year 4 note payable for the Andrew received the May invoice for 700 minutes. Payment is due rest of the cost. Interest and principal are duc on April 30, 2021. As on June 28 On May 10, Andrew paid the accounts payable balance fromments. LTC will use the bus for five years and will drive it an a condition of the loan, the bank requires monthly financial state- April 30. On that day, he also withdrew a personal salary of $5.000 expected 175.000 km. In May 2020, it was driven 3,000 km. The bus from the business. At the end of May, $1,200 of unused supplies has a residual value of $5,000. Depreciation is based on the number were still on hand of kilometers driven LTC also uses video equipment to record the tours it conducts. Operating Revenue Andrew gives customers a copy of the video at the end of the tour so Andrew charges $100 per person for each tour. This includes a full that they can remember their fun day. On May 1. Andrew traded in day of travel around London, lunch at a very nice restaurant, and his old equipment for new. better equipment worth $16.000. The stops at two museums. Most customers pay in cash on the day of the dealer allowed a trade-in value of $6,000 for the old cquipment, trip; however, some groups arrange tours and are given up to 30 days which was its fair value. The balance of the purchase price was paid after the four to pay. During May, 125 individuals paid cash for tours in cash. The new equipment will be depreciated on a straight-line and four groups arranged tours of 30 people cach. One of the groups basis over five years and has an expected residual value of $1,000. Unadjusted Trial Balance at April 30, Adjusted Trial Balance for May 31, 2020 Adjustments Required for Month End 2020 Debit Credit Debit Ref Credit Ref Debit Credit 18,200 6,630 5240 750 5,000 niture 1.000 8,000 uipment 4,000 6,400 1,900 20,000 10,520 43,820 43,820 No amounts should be typed in the Adjustments or Adjusted Trial Balance columns, Amounts in the "Adjustments" columns must be referenced from your "Journal and Adjusting Entries" worksheet. Amounts in the Adjusted Trial Balance must be calculated from columns B, C, E and G. ASSIGNMENT INSTRUCTIONS: a. Enter amounts from the London Tour Company Trial Balance in the Unadjusted Trial Balance columns in the "Trial Balance worksheet Make sure the debit and credit columns balance before you begin. Ignore the case requirement to prepare to T-accounts. b. Using the "Journal and Adjusting Entries" worksheet, prepare the May 2020 journal entries and adjusting entries to record the Additional Information from the case (Hint: don't forget to record the income taxes) Number your entries, instead of using dates. For example #1, #2, etc... Round amounts to the nearest dollar Show any calculations to the right of the entries. Please note that many account titles are not provided in the trial balance. You will have to use account titles from your textbook to record transactions. c. Prepare an adjusted trial balance. You will need to cell-reference your journal entries from the "Journal and Adjusting Entries" worksheet to the "Trial Balance". Note the number of the adjusting entry in the "Ref" column You will need to create new accounts for your journal and adjusting entries. Add these new accounts in column and place them in the correct order as they will be shown in the financial statements d. Prepare a multi-step income statement and a statement of retained earnings for the month ended May 31, 2020 and a statement of financial position as at May 31, 2020 Prepare your statements in the "Financial Statements" worksheet