The order of the answer should be as follows:

1. Comparative Balance Sheets

2. Comparative Income Statements

3. Statement of Shareholders' Equity

4. Cash Flow Statement

5. Adjusting Journal Entries

6. Horizontal close statement

7. Cash Flow Statement

Chess, Inc., Inc. has prepared its initial trial balance at December 31, 2016.

The company had 10 shares outstanding at the beginning of the year, issued 60000 shares on July 1, 2016 and another 1100 shares on September 15, 2016.

The company sold land that cost $2000.

The company has not recorded the following adjusting journal entries at the end of the year:

1. Wages are paid to employees at the rate of $30000 a day during the companys annual refurbishing between Christmas and New Years. Wages are paid every Friday evening for weekly activity; no one ever works Saturday, Sunday or holidays. Pretend New Years Day in 2016 was on Wednesday.

2. In early December, the bookkeeper recorded an entry to the prepaid insurance account which included $19000 of plant insurance for the month of December. 3. Also in early December, the bookkeeper recorded rent expense of $1000 which related to prepaid rents for January, 2017. 4. The bookkeeper records all purchases as inventory and adjusts her inventory account for sales at the end of the month. This has not yet occurred in December. Inventory is recorded on a last-in first-out methodology. The information necessary to record any inventory adjustment is as follows:

Units Units Unit Cost Total Cost

Beginning Inventory 6000 $2.00 $12,000

Purchases 3000 $6.00 $18,000

(Note, there are other costs included in cost of goods sold besides inventory)

Sales 850 $1,211,456

5. The bookkeeper records depreciation annually. Depreciation is calculated on a double declining balance. All assets were purchased on New Years Day of 2014 at 5:00 AM. The residual value of the equipment is $2565.56. (There is sufficient information here to determine the life of the property.)

6. After deep consideration, management has determined that it needs to establish a reserve for bad debts equal to seven percent of accounts receivable at year end.

7. The bookkeeper neglected to record the amortization of the patent which was purchased on January 1, 2016 for $50,000 and will expire after ten years.

8. The the interest payable in cash on the bond payable of $20,000 was not recorded on the books.

9. The income tax rate for 2016 only is 92%.

Chess, Inc.

Dec-15 Dec-16

Cash & cash equivalents 1000 4060000

Marketable securities 546370 7500000

Accounts receivable 9552199 5640000

Inventory 12000 30000

Prepaid insurance 19000 69000

Prepaid rents 54000 1250

Other current assets 256000 600213

Patent 45000 45000

Property, plant & equipment 0 60000

Accumulated depreciation 0 38400

Land 46000 6000000

Intangible asset - non-amortizing 45878 7500

Other investments 256323 185000

Accounts payable 600740 652000

Unearned revenue 0 7500

Bond Payable 200000 200000

Income taxes payable 208800 50000

Other current liabilities 9713840 235000

Long term debt 23000 4500

Common stock 50000 90000

Paid in capital 0 4545

Retained earnings 58990 58990

Revenues/Sales 5600000 40714550

Sales Discount 15000 250000

Sales returns and allowances 0 40000

Cost of goods sold 1580000 16000231

Other income - Sale of land 0 7500

Trade Marks 0 7000

Depreciation 0 0

General & administrative 56000 748956

Income Tax Expense 2500 0

Insurance expense 84260 10000

Investment income 500 420

Interest income 100 50

Interest expense 10500 450

Maintenance expense 0 70005

Rent expense 89000 350

Research & development 2828200 110000

Sales & marketing 45740 28500

Amortization Expense 5000 0

Wages & salaries 870000 600000