WILDHORSE IMAGES LTD. Post-Closing Trial Balance July 31, 2018 Debit Credit $ 161,660 2,527,200 $ 311,700 490,400 202,990 Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation-equipment Accounts payable Bank loan payable Common shares Retained earnings 73,027 1,036,850 321,500 289,200 1,349,973 $3,382,250 $3,382,250 The company had a limited amount of business activity in August 2018 because of holidays for both the company and its major customers. You have been hired on a temporary basis to update the company's records for August. The August transactions and adjustments are presented below: Aug. 1 Paid $20,200 for office expenses and $3,385 for the August rent. 2 Accepted a six-month, 8% note in exchange for Chen Enterprises' overdue account receivable of $103,500. 3 Sale on account to Chavier Ltd. for $496,200, terms 2/10, n/30. Cost of goods sold, $257,010. The company uses a perpetual inventory system. 8 Determined that an account receivable from Densmore Ltd. of $75,160 is uncollectible. 9 A $318,500 partial payment on account was received from Chavier (see August 3 transaction). 10 Old equipment was sold for $5,700. The equipment's original cost was $56,590; accumulated depreciation to the date of disposal was $46,404. 14 Paid a $9,060 income tax instalment. 21 Purchased a patent for $23,100 cash. The estimated useful life of the patent is five years; the legal life, 20 years. 31 Recorded cash received from sales of digital library images for the month, $72,010. The cost of goods sold is $37,700. 31 The monthly bank statement revealed the following unrecorded items: interest on bank loan, $1,640, and bank service charges, $1,232. 31 Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubtful accounts totalled $304,550 at month end. 31 Recorded depreciation for the month on the remaining equipment that cost $146,400 and is still in use. Useful life of all equipment is estimated to be four years with no residual value. The straight-line method of depreciation is used and depreciation is calculated to the nearest month. 31 Recorded and paid salaries for the month of $103,000. 31 Accrued interest on the Chen Enterprises' note receivable (see August 2 transaction). 31 Recorded amortization on the patent (see August 21 transaction). A full month's amortization is recorded on any intangible assets acquired during the month. Record the August transactions and adjustments. (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. Round answers to o decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Aug. 1 Office Expense 20200 20200 Cash (To record office expense) Aug. 1 Rent Expense 3385 Cash 3385 (To record rent expense) Aug. 2 Notes Receivable 103500 Accounts Receivable 103500 Aug. 3 Accounts Receivable 496200 Sales 496200 (To record sale on account) Aug. 31 Cost of Goods Sold 257010 Inventory 257010 (To record cost of goods sold) Allowance for Doubtful Accounts Aug. 8 75160 Accounts Receivable 75160 Aug. 9 Cash 312130 Sales Discounts 6370 Accounts Receivable 318500 Aug. 10 Cash 5700 Accumulated Depreciation - Equipment 46404 Accumulated Depreciation - Equipment 46404 Loss on Disposal 4486 Equipment 56590 Aug. 14 Income Tax Expense 9060 Cash 9060 Aug. 21 Patents 23100 Cash 23100 Aug. 31 Cash 72010 72010 Sales (To record sale on cash) Cost of Goods Sold Aug. 31 37700 37700 Inventory (To record cost of goods sold) Aug. 31 Bank Charges Expense 1232 Cash (To record interest expense) Aug. 31 Bad Debts Expense Allowance for Doubtful Accounts (To record bad debts) Aug. 31 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense) Aug. 31 Salaries Expense 103000 103000 Cash (To record salaries expense) Aug. 31 Salaries Expense 103000 Cash 103000 (To record salaries expense) Aug. 31 Interest Receivable Interest Revenue (To record accrued interest) Aug. 31 Amortization Expense Patents (To record amortization expense) Prepare T accounts and enter the July 31 opening balances. (Post entries in the order displayed in the problem statement.) Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Equipment Accumulated Depreciation-Equipment Accounts Payable Bank Loan Payable Common Shares Retained Earnings Post the journal entries from part (a) to the T accounts. (Post entries in the order of journal e in the previous part. Round answers to o decimal places, e.g. 5,275.) Cash July 31, 2018 161,660 Accounts Receivable July 31, 2018 2,527,200 Allowance for Doubtful Accounts 311,700 July 31, 2018 Interest Receivable Notes Receivable Inventory July 31, 2018 490,400 Equipment July 31, 2018 202,990 Accumulated Depreciation Equipment 73,027 July 31, 2018 Patents Accumulated Amortization-Patents Accounts Payable July 31, 2018 1,036,850 Bank Loan Payable July 31, 2018 321,500 Common Shares July 31, 2018 289,200 Retained Earnings July 31, 2018 1,349,973 Inventory July 31, 2018 490,400 Equipment July 31, 2018 202,990 Accumulated Depreciation Equipment 73,027 July 31, 2018 Patents Accumulated Amortization-Patents Accounts Payable July 31, 2018 1,036,850 Bank Loan Payable July 31, 2018 321,500 Common Shares July 31, 2018 289,200 Retained Earnings July 31, 2018 1,349,973 Sales Sales Discounts Interest Revenue Cost of Goods Sold Depreciation Expense Amortization Expense Salaries Expense Bad Debts Expense Office Expense Office Expense Rent Expense Bank Charges Expense Interest Expense Loss on Disposal Income Tax Expense Prepare an adjusted trial balance at August 31. (Round answers to 0 decimal places, e.g. 5,275.) WILDHORSE IMAGES LTD. Trial Balance Debit Credit