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 2015, the company had the following beginning balances (in dollar).

Accounts receivable $30,000

Allowance for doubtful accounts$1,500

Cash $10,000

Inventory $200,000

Prepaid advertisement $48,000

Salary payable $6,500

Accounts payable $50,000

Accumulated depreciation machine $90,000

Common stock $100,000

Machine $120,000

Retained earnings $160,000

During 2015, the following transactions occurred.

1. Winter Carnival acquired additional merchandise, totaled $70,000, of which $20,000 was on account.

2. Winter Carnival delivered merchandise and earned sales revenue, totaled $350,000, of which $200,000 was on credit. Cost, to Winter Carnival Co., of the merchandise sold, totaled $170,000.

3. Winter Carnival collected a total of $180,000 on its accounts receivable from its various customers.

4. Winter Carnival borrowed $100,000 on May 1, 2015 from a local bank, on a 6% note for 5 years. Winter Carnival would pay interest semi-annually on each May 1 and November 1.

5. In addition, Winter Carnival signed a sales contract with a customer, Mini-Soda Company to deliver a total of $90,000 merchandise January 2016. Winter Carnival collected $9,000 cash in advance from this customer on November 17, 2015.

6. Winter Carnival paid $60,000 on its accounts payable to its suppliers.

7. Winter Carnival incurred insurance expenses of $5,000, all paid in cash in 2015.

8. Winter Carnival paid its employees $80,000 cash for their salary. At the end of year 2015, the company still owed $5,500 salary payable to its employees. The following information was also available during 2015 for Winter Carnival Co.

9. Its ending balance of allowance for doubtful accounts was estimated to be 5% of its outstanding A/R at the end of 2015.

10. Its prepaid advertisement had 16 months remaining at the beginning of the year 2015.

11. The existing machine had an estimated life of 20 years with no residual value and had been depreciated using the straight-line method.

12. The income tax rate was 30% for Winter Carnival and the company would pay its income tax in the first quarter of 2016.

Required:

1. Based on above transactions, prepare journal entries and adjusting entries in 2015 for Winter Carnival.

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

3. Prepare a pre-closing trial balance, as of December 31, 2015.

4. Prepare an income statement, in a good format, for the year ended December 31, 2015 for Winter Carnival.

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

6. Prepare a balance sheet, in a good format, as of December 31, 2015 for Winter Carnival.

7. Prepare closing entries and a post-closing trial balance, as of December 31, 2015.