Tors Party & Rentals (TPR) is a party and novelty store located just north of Windsor. TPR is a private company, and was founded in 2008 by Amanda Harkings. TPR sells all kinds of party needs, from balloons to loot bags, and from gift wrap to food items. TPR also sells party supplies for special holiday occasions and huge sporting events. TPR has a party room on location that can be booked for parties and other special events. TPR has a December 31 year end and operates by using a fairly simple accounting structure. Jessica Altooze has been the bookkeeper for TPR since it opened in 2008 and has been diligent in recording the journal entries and preparing the year-end financial statements. In November 2020, Jessica won the lottery and immediately retired from the bookkeeping business and moved to South Carolina. This left Amanda on her own and without any real skills in accounting. Amanda immediately asked her auditor for someone with an accounting background to help her and you were hired as a result. TPR had one major creditor at the beginning of 2020. One of the major banks loaned TPR $500,000 for ongoing operating costs. The outstanding portion of the loan was $400,000 at the beginning of the year. The bank requires TPR to maintain a current ratio of 1.8:1 or the loan may become immediately repayable. It also requires TPR to have a debt to total asset ratio of no greater than 55%.

Use the information in the case to prepare necessary adjusting journal entries at December 31, 2020.

Post the entries from questions 1 to the T-accounts provided and calculate the ending balance in each account.

Prepare an adjusted trial balance (pre-closing) at December 31, 2020

Based on your ending balances, prepare necessary closing journal entries at December 31, 2020

Prepare the income statement for 2020

Prepare the statement of retained earnings for 2020

Prepare a classified balance sheet at December 31, 2020