Your predecessor left the firm in a hurry. Your primary responsibility is to finish the 2019 year-end financial statements. Specifically, you must complete: 1) any necessary correcting journal entries 2) all the adjusting journal entries 3) the trial balances 4) the closing journal entries 5) a complete multi-step Income Statement for the year ended Dec. 31, 2019 6) a classified Balance Sheet as of December 31, 2019. Adjusting Journal Entries Debit Credit Adjusted Trial Bal. 12/31 Debit Credit 4,254,800 Closing Journal Entries Debit Credit Final Trial Balance 12/31 Debit Credit 4,254,800 Delta Therapy Supply 12/31/2019 Cash Accounts Receivable Allowance for Bad Debt Inventory Inventory Purchases Construction in Progress Billings on Contract Property, Plant Equipment Accumulated Depreciation Income Tax Payable Common Stock Retained Earnings Product Sales Revenue Sales Returns PT Cont Ed Revenue Progress-Tracker Revenue Cost of Product Sales Cost of PT Cont Ed Services Cost of Progress-Tracker Services General and Admin Expense Unadjusted Trial Bal. 12/31 Debit Credit 4,254,800 3,794,500 14,400 8,960,000 51,539,200 3,039,240 3,078,000 10,080,000 4,032,000 429,000 35,000 500,000 26,019,940 49,328,000 690,600 1,560,100 3,600,000 0 1,248,100 2,160,000 2,830,000 Accounts Payable 1 Insert more account rows if necessary TOTAL 88,596,440 88,596,440 Additional Information About Normal Operations: a. Cost of Goods Sold: DTS uses a periodic FIFO inventory system for its normal restaurant equipment operations. A physical inventory count indicated 40,000 units on hand at the end of 2019. PURCHASES FOR 2019 (normal operations) Beginning units: 14,000 units @ $640.00 each Purchases: Apr - May 15,000 units @ $646.40 each Jun - Jul 20,000 units @ $649.60 each Aug - Sep 18,000 units @ $652.80 each Oct 12,000 units @ $656.00 each Nov - Dec 14,000 units @ $659.20 each b. DTS uses straight-line depreciation and all fixed assets were purchased at the beginning of 2017 and have a 5-year useful life. No depreciation entries have been recorded yet during 2019. c. Bad debt for Accounts Receivable: DTS management does not expect there to be any change in the collectability of its credit sales related to its regular restaurant equipment operations. DTS uses the Accounts Receivable approach to estimate bad debts, and the aging schedule at 12/31/2019 is summarized below: Days outstanding % of Accts Rec 0-30 days 58% 30-60 days 26% 60-90 days 14% >90 days 2% Estimated % Uncollectible 0.50% 1.50% 10.00% 40.00% d. In addition to its physical therapy equipment products, DTS's management entered into a long-term agreement on September 1, 2019 to begin supplying its internally developed web-based commercial therapy tracking software, PROGRESS- TRACKER, along with maintenance support, to a regional chain of therapy centers. The details of the agreement called for DTS to be paid $3,600,000 up front for the software and 3 years of maintenance support (beginning on the agreement date). The therapy center chain could have bought just the software for $2,870,300 with no support, and they could have independently contracted for the maintenance support for $1,116,200 for the three-year period. DTS determines the sales price, and directs the customization of the software. The cost of the software sold to the therapy center chain was $2,160,000. DTS considers this software part of its normal operations, and has recorded this sale as a point-of-sale transaction. e. In October, 2019 DTS also launched a new service through its website (called PT CONT ED on the trial balance worksheet). PT CONT ED offers online continuing education to Physical Therapist and Assistant PT's through contracted independent instructors. Each instructor sets her own price for a training session. DTS connects interested individuals with the instructors but does not directly provide any of the training. For its services and per the contract, DTS is entitled to 20% of the total per session fee. DTS also considers this service part of its normal operations. DTS recorded the entire amount of the fee collected as revenue and recognized its cost associated with PT CONT ED as 80% of the fee. Additional Information: f. Finally, in addition to its normal operations, DTS also has launched a division that builds physical therapy centers. At the end of 2018, there was one building project in process: the $3,800,000 Bradshaw Clinic (BC) projecta state-of-the-art physical therapy facility. This project, which was started in June, 2018, qualifies as a single performance obligation with revenue recognized over the period of the project according to the percentage-of-completion method based on a cost-to-cost approach. The original estimated cost for the PC project was $2,720,800 at the end of 2018. But there have been substantial increases in the cost of materials resulting, as of the end of 2019, in a total actual and estimated cost of $3,040,000. The contract does not allow for renegotiation of the contracted price. DTS has a legally binding, enforceable contract with the customer and all parties are expected to be able to perform under the contract. The general ledger accounts Construction-in-Progress and Billings-on- Contract show the following before any 2019 year-end adjusting entries. Billings-on-Contract 1,414,360 2018 Construction-in-Progress 2018 cost 1,224,360 2018 AJE 485,640 2019 cost 1,329,240 Unadj. 3,039,240 1,663,640 2019 3,078,000 Unadj. g. DTS's effective tax rate is 25%. Ignore all other taxes. h. There are 400,000 shares of common stock outstanding for 2019. Note: You must format your Excel solution so that I can print entire workbook and display your name in the header and follow your solution without dangling blank pages. Your predecessor left the firm in a hurry. Your primary responsibility is to finish the 2019 year-end financial statements. Specifically, you must complete: 1) any necessary correcting journal entries 2) all the adjusting journal entries 3) the trial balances 4) the closing journal entries 5) a complete multi-step Income Statement for the year ended Dec. 31, 2019 6) a classified Balance Sheet as of December 31, 2019. Adjusting Journal Entries Debit Credit Adjusted Trial Bal. 12/31 Debit Credit 4,254,800 Closing Journal Entries Debit Credit Final Trial Balance 12/31 Debit Credit 4,254,800 Delta Therapy Supply 12/31/2019 Cash Accounts Receivable Allowance for Bad Debt Inventory Inventory Purchases Construction in Progress Billings on Contract Property, Plant Equipment Accumulated Depreciation Income Tax Payable Common Stock Retained Earnings Product Sales Revenue Sales Returns PT Cont Ed Revenue Progress-Tracker Revenue Cost of Product Sales Cost of PT Cont Ed Services Cost of Progress-Tracker Services General and Admin Expense Unadjusted Trial Bal. 12/31 Debit Credit 4,254,800 3,794,500 14,400 8,960,000 51,539,200 3,039,240 3,078,000 10,080,000 4,032,000 429,000 35,000 500,000 26,019,940 49,328,000 690,600 1,560,100 3,600,000 0 1,248,100 2,160,000 2,830,000 Accounts Payable 1 Insert more account rows if necessary TOTAL 88,596,440 88,596,440 Additional Information About Normal Operations: a. Cost of Goods Sold: DTS uses a periodic FIFO inventory system for its normal restaurant equipment operations. A physical inventory count indicated 40,000 units on hand at the end of 2019. PURCHASES FOR 2019 (normal operations) Beginning units: 14,000 units @ $640.00 each Purchases: Apr - May 15,000 units @ $646.40 each Jun - Jul 20,000 units @ $649.60 each Aug - Sep 18,000 units @ $652.80 each Oct 12,000 units @ $656.00 each Nov - Dec 14,000 units @ $659.20 each b. DTS uses straight-line depreciation and all fixed assets were purchased at the beginning of 2017 and have a 5-year useful life. No depreciation entries have been recorded yet during 2019. c. Bad debt for Accounts Receivable: DTS management does not expect there to be any change in the collectability of its credit sales related to its regular restaurant equipment operations. DTS uses the Accounts Receivable approach to estimate bad debts, and the aging schedule at 12/31/2019 is summarized below: Days outstanding % of Accts Rec 0-30 days 58% 30-60 days 26% 60-90 days 14% >90 days 2% Estimated % Uncollectible 0.50% 1.50% 10.00% 40.00% d. In addition to its physical therapy equipment products, DTS's management entered into a long-term agreement on September 1, 2019 to begin supplying its internally developed web-based commercial therapy tracking software, PROGRESS- TRACKER, along with maintenance support, to a regional chain of therapy centers. The details of the agreement called for DTS to be paid $3,600,000 up front for the software and 3 years of maintenance support (beginning on the agreement date). The therapy center chain could have bought just the software for $2,870,300 with no support, and they could have independently contracted for the maintenance support for $1,116,200 for the three-year period. DTS determines the sales price, and directs the customization of the software. The cost of the software sold to the therapy center chain was $2,160,000. DTS considers this software part of its normal operations, and has recorded this sale as a point-of-sale transaction. e. In October, 2019 DTS also launched a new service through its website (called PT CONT ED on the trial balance worksheet). PT CONT ED offers online continuing education to Physical Therapist and Assistant PT's through contracted independent instructors. Each instructor sets her own price for a training session. DTS connects interested individuals with the instructors but does not directly provide any of the training. For its services and per the contract, DTS is entitled to 20% of the total per session fee. DTS also considers this service part of its normal operations. DTS recorded the entire amount of the fee collected as revenue and recognized its cost associated with PT CONT ED as 80% of the fee. Additional Information: f. Finally, in addition to its normal operations, DTS also has launched a division that builds physical therapy centers. At the end of 2018, there was one building project in process: the $3,800,000 Bradshaw Clinic (BC) projecta state-of-the-art physical therapy facility. This project, which was started in June, 2018, qualifies as a single performance obligation with revenue recognized over the period of the project according to the percentage-of-completion method based on a cost-to-cost approach. The original estimated cost for the PC project was $2,720,800 at the end of 2018. But there have been substantial increases in the cost of materials resulting, as of the end of 2019, in a total actual and estimated cost of $3,040,000. The contract does not allow for renegotiation of the contracted price. DTS has a legally binding, enforceable contract with the customer and all parties are expected to be able to perform under the contract. The general ledger accounts Construction-in-Progress and Billings-on- Contract show the following before any 2019 year-end adjusting entries. Billings-on-Contract 1,414,360 2018 Construction-in-Progress 2018 cost 1,224,360 2018 AJE 485,640 2019 cost 1,329,240 Unadj. 3,039,240 1,663,640 2019 3,078,000 Unadj. g. DTS's effective tax rate is 25%. Ignore all other taxes. h. There are 400,000 shares of common stock outstanding for 2019. Note: You must format your Excel solution so that I can print entire workbook and display your name in the header and follow your solution without dangling blank pages