Chapter 4, Problem 4.12P

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

The Jiayin Li Corporation, which is a technology company, was formed on January 1 of the current year Transactions completed during the first year of operation follow.

January 1:		Issued 1,000,000 shares of common stock for $ 15,000,000, which is the par value of the stock.
January 10:		Acquired equipment in exchange for $2,000,000 cash and a $5,000,000 note payable The note is due in 10 years.
February 10:		Paid $48,000 for a business insurance policy covering the two-year period beginning on March 1.
February 14:		Purchased $900,000 of supplies on account.
March 1:		Paid wages of $195,000.
March 15:		Billed $2,500,000 for services rendered on account.
April 3:		Paid $125,000 of the amount due on the supplies purchased on February 14.
April 17:		Billed $2,000,000 for services rendered on account.
May 1:		Paid wages of $200,000.
May 7:		Collected $200,500 of the outstanding accounts receivable.
May 8:		Received bill and paid $96,500 for utilities.
May 24:		Paid $40,000 for sales commissions.
June 4:		Made the first payment on the note issued on January 10. The payment consisted of $50,000 of interest and $150,000 to be applied against the principal of the note.
June 18:		Billed customers for $646,000 of services rendered.
June 29:		Collected $450,000 on accounts receivable.
July 10:		Purchased $45,000 of supplies in cash.
Aug 25:		Paid $120.000 for administrative expenses.
Sept 23:	Paid $35,500 for warehouse repairs.
October 1:	Paid wages of $100,000.
Nov 23:	Purchased supplies for $500,000 on account.
Dec 19:	Collected $150,000 in advance for services to be provided in December and January of the following year.
Dec 30:	Declared and paid a $20,000 dividend to shareholders.

The chart of accounts used by Jiayin Li is presented here:

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
500: Expenses		501	Wage Expense
		502	Utilities Expense
	503			Selling Expense
	504			Administrative Expense
	505			Repairs Expense
	506			Insurance 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. Ten months of the insurance policy had expired by the end of the year.
   2. ii. Depreciation for the equipment is $380,000.
   3. iii. The company provided a portion of the services related to the advance collection of December 19.
   4. iv. The company recognized $50,000 as service revenue for services performed.
   5. v. An additional $160,000 of interest had accrued on the note by the end of the year.
   6. vi. Jiayin Li Corporation accrued wages in the amount of $200,000.
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.