Blossom Snow Removal Ltd. is a residential and commercial snow removal company Blossom signs contracts with customers for snow removal services that start on November 1 and end on March 30. The company starts signing contracts in the month of September for the winter season. Blossom has a year end on December 31 and had the following transactions involving current liabilities during the year: 1 Blossom signs contracts with customers and requests 100% of the contract price as a deposit at the time of signing. The company signed contracts for snow removal totaling $615,000. Based on past history, Blossom estimates that ane third (1/3) of the contract amount is earned by December 31. 2 Blossom has 10 employees, who are on standby in the event it snows. The employees earn gross wages of $125.000 for the year. From this, the company deducted 15% for income taxes, $6,813 in CPP premiums, and $1,975 in El premiums before distributing the pay cheques to the staff. As an employer, Blossom was also required to match the employees CPP premiums and pay $2,765 in El premiums. Blossom had fallen behind in making payments owing to the government. The last 4 months of the year were still outstanding (that is, 4/121. 3 Blossom ordered salt and sand from suppliers for the upcoming season. The suppliers provided credit to Blossom and at the end of the year, Blossom owed $5,550 on total purchases of $7,400. 4 Blossom also sells service cards whereby a customer is not required to sign up for the season, instead the customer purchases a 5 or 10 snow removal service package to be used at the customer's discretion. The service packages cannot be carried over to the next season and expire on March 30. During the current winter session, the company sold $123,000 in service cards. As of December 31, none of the customers had used up the service cards, anticipating heavier snowfall in the January and February months. a)Prepare summary journal entries to record the transactions and any necessary adjusting journal entries. (Record journal entries in the order presented in the problem. 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, eg. 125. List all debit entries before credit entries.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blossom Snow Removal Ltd. is a residential and commercial snow removal company Blossom signs contracts with customers for snow removal services that start on November 1 and end on March 30. The company starts signing contracts in the month of September for the winter season. Blossom has a year end on December 31 and had the following transactions involving current liabilities during the year:

1 Blossom signs contracts with customers and requests 100% of the contract price as a deposit at the time of signing. The company signed contracts for snow removal totaling $615,000. Based on past history, Blossom estimates that ane third (1/3) of the contract amount is earned by December 31.

2 Blossom has 10 employees, who are on standby in the event it snows. The employees earn gross wages of $125.000 for the year. From this, the company deducted 15% for income taxes, $6,813 in CPP premiums, and $1,975 in El premiums before distributing the pay cheques to the staff. As an employer, Blossom was also required to match the employees CPP premiums and pay $2,765 in El premiums. Blossom had fallen behind in making payments owing to the government. The last 4 months of the year were still outstanding (that is, 4/121.

3 Blossom ordered salt and sand from suppliers for the upcoming season. The suppliers provided credit to Blossom and at the end of the year, Blossom owed $5,550 on total purchases of $7,400.

4 Blossom also sells service cards whereby a customer is not required to sign up for the season, instead the customer purchases a 5 or 10 snow removal service package to be used at the customer's discretion. The service packages cannot be carried over to the next season and expire on March 30. During the current winter session, the company sold $123,000 in service cards. As of December 31, none of the customers had used up the service cards, anticipating heavier snowfall in the January and February months.

a)Prepare summary journal entries to record the transactions and any necessary adjusting journal entries. (Record journal entries in the order presented in the problem. 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, eg. 125. List all debit entries before credit entries.)

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