WALLAWALLA Corporation's statement of financial position at December 31, 2020, is presented below. WALLAWALLA CORPORATION Statement of Financial Position December 31, 2020 Cash $24.480 Accounts payable $56,712 Accounts receivable 46,410 Mortgage payable 81,600 Allowance for doubtful accounts Common shares, unlimited number authorized, 3,000 issued (1,530) 30,600 Inventory 71,400 129,948 Retained earnings Accumulated other comprehensive income Supplies 4,488 9,588 Land 40,800 Buildings 144,840 Accumulated depreciation (22,440) $308,448 $308,448 During 2021, the following transactions occurred. 1. Issued 510 shares of $3 noncumulative preferred shares for $51,000. WALLAWALLA is authorized to issue 51,000 preferred shares. Issued 510 common shares for $30,600. 2 2. 3. Sold inventory for $326,400 on account and $102,000 for cash. WALLAWALLA uses a perpetual inventory system and its cost of goods sold for this total transaction was $255,000. Hampton has not historically experienced any sales returns. 4. Collected $301.920 from customers on account. 5. Bought $35,791 of supplies on account. Purchased $336,600 of inventory on account, terms 2/10,n/30. 6. 7. Paid $328,000 on accounts payable related to purchases of merchandise in transaction 6, within the 10-day discount period 8. Paid salaries of $89,964. 9. 10. Wrote off an account receivable of $1,734, which originated in 2020, as uncollectible. Paid $2,040 on the mortgage principal during the year, and $4,080 of interest. Near the end of the current fiscal year, WALLAWALLA declared the annual preferred share cash dividend of $1,530 and a $4,590 common share cash dividend, to shareholders of record on January 13, 2022, payable on January 31, 2022. 11. Adjustment data: A count of supplies indicates that $6,018 of supplies remain unused at year end. 1. 2. 3. Estimated uncollectible accounts were $3,570 at year end. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a residual value of $10,200. Interest of $357 is owed on the mortgage at year end. The current portion of the mortgage due is $2,550. The bank statement included a service charge of $3,060. 4. 5. 6. Income tax of $6,120 is estimated to be due. (a - c1) Record the above summary transactions and adjusting journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Summary Transaction Entries: No. Account Titles and Explanation Debit Credit 1. Cash Common Shares 2. Accounts Receivable Cash 3. Allowance for Doubtful Accounts Cash Retained Earnings (To record sales) (To record cost of goods sold) 4. 5. 5. 7. 3. 2
