Unadjusted
Account Title	Trial Balance
	DR	CR
Cash	240,300	-
Accounts Receivable	925,000	-
Allowance for Doubtful Accounts	-	49,000
Interest Receivable	-
Merchandise Inventory	187,500	-
Prepaid Insurance	9,000	-
Prepaid Advertising	-	-
Prepaid Rent	-	-
Office Supplies	7,800	-
Note Receivable	75,000	-
Available for Sale Securities	380,000	-
Office Building	4,250,000	-
Accumulated Depreciation - Office Building	-	221,500
Storage Building	1,650,000	-
Accumulated Depreciation - Storage Building	-	-
Land	450,000	-
Leasehold Improvements	190,000	-
Accumulated Depreciation - Leasehold Improvements	-	-
Office Equipment	125,000	-
Accumulated Depreciation - Office Equipment	-	42,000
Patent	250,000	-
Accounts Payable	-	145,000
Sales Tax Payable	-	-
Salaries Payable	-	-
Payroll Taxes Payable	-	-
Interest Payable	-	-
Income Tax Payable	-	-
Unearned Rent Revenue	-	96,000
Loan Payable - Onstar Bank	-	500,000
Loan Payable - Coldstar Bank	-	2,250,000
Common Stock	-	425,000
Additional Paid in Capital	-	2,800,000
Retained Earnings	-	1,379,420
Accumulated Other Comprehensive Income	-	8,500
Dividends	280,000	-
Sales	-	4,380,250
Sales Returns and Allowances	19,500	-
Sales Discounts	14,600	-
Cost of Goods Sold	1,817,900	-
Sales Salaries Expense	676,400	-
Office Salaries Expense	434,000	-
Advertising Expense	54,000	-
Depreciation Expense - Office Building	-	-
Depreciation Expense - Leasehold Improvements	-	-
Depreciation Expense - Office Equipment	-	-
Leasing Expense - Stores	132,000	-
Miscellaneous Selling Expense	16,950	-
Rent Expense - Storage Facility	18,000	-
Insurance Expense	2,000	-
Office Supplies Expense	28,500	-
Warranty Expense	5,000
Miscellaneous Administrative Expense	9,220	-
Rent Revenue	-	-
Interest Revenue on Note Receivable	-	-
Dividend Revenue on AFS Securities	-	18,000
Bad Debt Expense	67,000	-
	12,314,670	12,314,670

1. On the designated worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. (round all numbers to the nearest dollar). Letter entries to correspond to the below information and present them in alphabetical order. Add any new accounts as needed to the trial balance. Streamline each adjusting entry by combining accounts. Each entry must be entirely correct to receive allocated points. Before preparing entries, finish the story by filling in the blanks.

DeeDee Double Entry was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 425,000 shares of common stock as of 12/31/2017. No new shares were issued during 2017.

i.) On December 1, 2017 DeeDee paid ABC Advertising $16,000 for a four month campaign of advertising services. Equal services are provided each month. All other advertising paid for during the year has been consumed.

j.) On August 1, 2017, DeeDee rented a portion of one store to Marketing Majors Inc. The contract was for 19 months and DeeDee required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company.

k.) As of 12/31/2017 the Available for Sale Securities have a fair value of $291,000. Due to the market conditions, the company does not plan on selling the assets in 2017, but their intent is to sell at some point in time. You can ignore the tax effect on unrealized gains and losses. (Hint: Unrealized Gains and Losses are closed to Accumulated Other Comprehensive Income at the end of the year.)

l.) DeeDee uses the DDB method to depreciate office equipment. No office equipment was added during 2017. It is estimated that the office equipment has a useful life of 10 years with a salvage value of $2,000. Prior depreciation was correctly calculated based on period of time held.

m.) After reviewing details of sales, you note that the sales taxes collected on the last week of Decembers sales were included in sales revenue. Sales recorded the last week of December that included the sales tax of 13% amounted to $185,000.

n.) On December 1, 2017, DeeDee recorded a patent in the amount of $250,000. The company paid outside legal fees of $120,000 to have the patent registered. The other $130,000 represents internal costs in developing the patent. The patent is good for 20 years, but the company estimates that the patent will have a useful life of 8 years with no residual value. No one knows what to do with this information so no amortization has been recorded for 2017. Amortization is straight line and the company depreciates using partial years for intangible assets.

o.) The storage building was self-constructed this year by DeeDee. The Company had their initial expenditure of $700,000 on January 1. They paid an additional $500,000 on March 1^st , $300,000 on June 1^st, and then the final payment of $150,000 on August 1^st. when the building was completed and occupancy occurred. Payments to contractor were properly capitalized. The company has decided to use S/L method for depreciation. The storage building is estimated to have a life of 30 years and a savage value of $250,000. The company will take a full year of depreciation in year of acquisition.

p.) You note that Leasehold Improvements have not been depreciated for this year. DeeDee started to lease some new retail space in 2017 and added shelving and fixtures to this leased space. Based on your review of invoices, the previous accountant capitalized the cost of fixtures but did not capitalize the shipping and installation costs of $5,379. These costs were expensed and recorded as a miscellaneous administrative expense. DeeDee has decided to use double declining balance (DDB) depreciation for this item and to take a full year of depreciation in the year of acquisition. The leasehold improvements have a useful life of 15 years with a salvage value of $10,000.

q.) DeeDee Double Entry has two loans outstanding as of 12/31/2017. Interest is paid annually on January 1st. The facts on each loan are as follows: Onstar Bank Loan outstanding since January 1, 2017 with a 3.5% interest rate. This loan was taken out to finance the construction of the Storage Building. Interest for the year and 15% of the principle will be paid to the bank on January 1, 2018. Except for recording the initial cash received and loan, no additional entries have been made. Coldstar Bank Loan also outstanding all of 2017 with a 4.9 % interest rate. Interest is due on January 1, 2018. Principle is due on January 1, 2023. Since interest will not be paid to the Bank until 2018, DeeDees office staff did not accrue any interest.

r.) DeeDee added a one-year warranty to one of its computer games this year. It is estimated that the total cost of servicing the warranties on the 2017 sales will be $10,379. During 2017, $4,750 was refunded to customers for warranty issues on 2017 sales and recorded as warranty expense.

s.) DeeDee uses the FIFO Inventory Method in valuing inventory. The inventory balance of $187,500 was based on a physical count at 12/31/2017. Based on your analysis, you have noted that $12,500 of marketing games that belonged to Marketing Majors Inc. was included in the account. You also note that goods were in transit from a vendor on December 31, 2017. The cost of the inventory was $16,200 and the goods were shipped f.o.b. shipping point on December 29, 2017.

t.) DeeDee has a straight tax rate of 28%. Income tax expense is Net Income before taxes times 28%. (Hint: Prepare the Income Statement up to Net Income before Taxes and then record this adjusting journal entry.