The Queen of the Snows started a business, Winter Carnival Co., a company that specializes in merchandise for ice-fishing, snow-sliding, treasure-hunting and other winter activities. In 2017, the company had the following beginning balances (in dollar).

Beginning Balances:

Accounts Receivable: 30,000

Allowance for Doubtful Accounts: 3,000

Cash: 50,000

Inventory: 220,000

Prepaid Advertisement: 36,000

Salary Payable: 3,000

Accounts Payable: 70,000

Accumulated Depreciation: 10,000

Common Stock: 100,000

Machine: 50,000

Retained Earnings: 200,000

During 2017, the following transactions occurred.

Winter Carnival borrowed $500,000 on February 1, 2017 from a local bank, on a 2% note for 5 years. Winter Carnival would pay interest semi-annually on each August 1 and February 1.

Winter Carnival delivered merchandise and earned sales revenue, totaled $300,000, of which $250,000 was on credit. Cost, to Winter Carnival Co., of the merchandise sold, totaled $150,000.

In addition, Winter Carnival signed a sales contract with a customer, Mini-Soda Company to deliver a total of $60,000 merchandise in January 2018. Winter Carnival collected $18,000 cash in advance from this customer on October 17, 2017.

Winter Carnival acquired additional merchandise, totaled $100,000, of which $90,000 was on account.

Winter Carnival paid $80,000 on its accounts payable to its suppliers.

Winter Carnival collected a total of $230,000 on its accounts receivable from its various customers.

Winter Carnival paid its employees $90,000 cash for their salary. At the end of year 2017, the company still owed $2,500 salary payable to its employees.

Winter Carnival incurred insurance expenses of $6,000, all paid in cash in 2017.

The following information was also available during 2017 for Winter Carnival Co.

9.

Its prepaid advertisement had 18 months remaining at the beginning of the year 2017.

The existing machine had an estimated life of 10 years with no residual value and had been depreciated using the straight-line method.

Its bad debt expense was estimated to be 10% of its outstanding A/R on 12/31/2017.

The income tax rate was 21% for Winter Carnival and the company would pay its income tax in the first quarter of 2018.

Required:

Based on above transactions, prepare journal entries and adjusting entries in 2017 for Winter Carnival.

Set up T-accounts and post your journal entries and adjusting entries to T-accounts. (A kind reminder: Dont forget the beginning balances.)

Prepare a pre-closing trial balance, as of December 31, 2017.

Prepare an income statement, in a good format, for the year ended December 31, 2017 for Winter Carnival.

Prepare a statement of retained earnings, in a good format, for the same period for Winter Carnival.

Prepare a balance sheet, in a good format, as of December 31, 2017 for Winter Carnival.

Prepare closing entries and a post-closing trial balance, as of December 31, 2017.