You are employed to Peter Pan Ltd a company owned by Peter Pantry, a merchandiser involved in the business of selling baking utensils and equipment. On January 1^st, 2018 you were appointed to the position of Chief Financial Officer which made you responsible for the maintenance of the companys accounting records, internal control and preparation of the financial statements. The following trial balance was extracted from the books of Peter Pan Ltd, at June 30, the end of the companys fiscal year.

Peter Pan Ltd

Trial Balance as at June 30, 2018

The following additional information is available at June 30, 2018:

(i) Eight (8) months rent amounting to $280,000 was PAID IN ADVANCE on January 1, 2018

(ii) The Furniture and equipment is being depreciated over 10 years on the double-declining balance method of depreciation, down to a residue of $80,000.

(iii) Wages earned by employees NOT yet paid amounted to $35,000 at June 30, 2018.

(iv) A physical count of inventory at June 30, 2018, reveals $290,000 worth of inventory on hand.

(v) On January 1, 2018 the company received $260,000 IN ADVANCE for sales to be provided evenly from January 1, 2018, through October 31, 2018. None of the revenue from this client has been recorded.

(vi) The aging of the Accounts Receivable schedule at June 30, 2018 indicated that the Allowance for Bad-Debts should be $65,000.

Required:

a) Prepare the necessary adjusting journal entries on June 30, 2018. [Narrations are not required] (9 marks)

b) Prepare the companys multiple-step income statement for the year ended June 30, 2018. (12 marks)

c) Prepare the companys statement of owners equity for the year ended June 30, 2018. (3 marks)

d) Prepare the companys classified balance sheet as at June 30, 2018. (16 marks)

CR $ DR$ 440,000 530,000 40,000 A/C Name Cash Accounts Receivable Allowance for Bad Debts Merchandise Inventory Store Supplies Prepaid Rent Furniture and Equipment Accumulated Depreciation -Furniture and Equipment Accounts Payable Wages Payable Notes Payable, Long-Term Unearned Sales Revenue Peter Pantry, Capital Peter Pantry, Withdrawal Sales Revenue Earned 320,000 10,000 280,000 600,000 120,000 145,000 510,000 260.000 1,900,000 75.000 1,095,000 645.000 525,000 210,000 230,000 Wages Expense Rent Expense Utilities Expense Depreciation Expense -Furniture and Equipment Store Supplies Expense Bad debt Expense Interest Expense Total 160,000 45,000 4,070,000 4,070,000