Chapter 4, Problem 4.11P

Transaction Analysis; Journal Entries, Posting, Unadjusted Trial Balance, Adjusting Journal Entries, Adjusted Trial Balance, Financial Statements, Closing Entries, Post-Closing Trial Balance.

The Umbro Company, which is a fitness center, was formed on January 2 of the current year. Transactions completed during the first year of operation are presented below.

January 2:	Issued 900.000 shares of common stock for $15,000,000, which is the par value of the stock.
January 10:	Acquired equipment in exchange for $2,500.(XX) cash and a $6,000,000 note payable. The note is due in 10 years.
February 1:	Paid $36,000 for a business insurance policy covering the two-year period beginning on February 1.
February 22:	Purchased $930,000 of supplies on account.
March 1:	Paid wages of $194,600.
March 23:	Billed $2,820,000 for services rendered on account.
April 1:	Paid $130,000 of the amount due on the supplies purchased on February 22.
April 17:	Collected $190,000 of the outstanding accounts receivable.
May 1:	Paid wages of $209,400.
May 8:	Received bill and paid $96,700 for utilities.
May 24:	Paid $45,500 for sales commissions.
June 1:	Made the first payment on the note issued on January 10. The payment consisted of $50,000 of interest and $210.000 to be applied against the principal of the note.
June 16:	Billed customers for $680,000 of services rendered.
June 30:	Collected $450.(XX) on accounts receivable.
July 10:	Purchased $ 166.000 of supplies on account.
Aug 25:	Paid $150,000 for administrative expenses.
Sept 23:	Paid $35.(XX) for warehouse repairs.
October 1:	Paid wages of $100,000.
Nov 20:	Purchased supplies for $45,000 with cash.
Dec 15:	Collected $134,700 in advance for services to be provided in December and January of the following year.
Dec 30:	Declared and paid a $50,000 dividend to shareholders.

The chart of accounts used by the Umbro Company follows:

Chart of Accounts
Group	Account #	Account Title
100: Assets	101	Cash
	102	Accounts Receivable
	103	Supplies
	104	Prepaid Insurance
	110	Equipment
	112	Accumulated Depreciation—Equipment
200: Liabilities	201	Accounts Payable
	202	Unearned Service Revenue
	203	Wages Payable
	210	Interest Payable
	220	Notes Payable
300: Stockholders’ Equity	301	Common Stock
	310	Retained Earnings
	320	Dividends
400: Revenues	401	Service Revenue

Chart of Accounts
Group	Account #	Account Title
500: Expenses	501	Wage Expense
	502	Utilities Expense
	503	Selling Expense
	504	Administrative Expense
	505	Repairs Expense
	506	Insurance Expense
	507	Supplies Expense
	510	Depreciation Expense—Equipment
	520	Interest Expense
600: Other	601	Income Summary

1. a. Journalize the transactions for the year.
2. b. Post the journal entries to t-accounts.
3. c. Prepare an unadjusted trial balance as of December 31.
4. d. Journalize and post adjusting entries to t-accounts based on the following additional information.
   1. i. Eleven months of the insurance policy expired by the end of the year.
   2. ii. Depreciation for the equipment is $420,000
   3. iii. The company provided a portion of the services related to the advance collection of December 15. The company recognized $72,000 as service revenue for services performed.
   4. iv. There are $501,000 of supplies on hand at the end of the year.
   5. v. An additional $172,000 of interest has accrued on the note by the end of the year.
   6. vi. Umbro accrued wages in the amount of $240,000.
5. e. Prepare an adjusted trial balance as of December 31.
6. f. Prepare a single-step income statement and statement of stockholders’ equity for the current year and a classified balance sheet as of the end of the year
7. g. Journalize and post closing entries.
8. h. Prepare a post-closing trial balance as of December 31.