The Skate Shop, owned by Arty Fritz, sells in-line skates in the summer and ice skates in the winter. The shop has an Au

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The Skate Shop, owned by Arty Fritz, sells in-line skates in thesummer and ice skates in the winter. The shop has an August 31fiscal year end and uses a perpetual inventory system and theearnings approach (ASPE). On August 31, 2022, the company had thefollowing balances in its general ledger.Cash........................................................................................$ 9,552 Merchandise inventory............................................................ 81,108Supplies...................................................................................4,095 Equipment...............................................................................70,800 Accumulated depreciation—equipment.................................. 13,275 Accountspayable....................................................................18,445 Unearned revenue – giftcards................................................ 5,205 Notespayable.........................................................................42,000 A. Fritz, capital........................................................................58,400 A. Fritz, drawings....................................................................57,600 Sales.......................................................................................513,810 Sales returns and allowances................................................. 12,595 Salesdiscounts.......................................................................300 Rentrevenue...........................................................................1,200 Cost of goods sold..................................................................317,945 Salariesexpense.....................................................................74,400 Rent expense..........................................................................19,800 Insuranceexpense..................................................................4,140
The company had the following additional information: 1. A countof supplies on August 31, shows $755 on hand 2. The equipment hasan estimated eight-year useful life. 3. The interest rate on thenote is 5%. 4. Of the notes payable, $6,000 must be paid onSeptember 1 each year along with any accrued interest. 5. Ananalysis of the unearned revenue account shows that $3,750 has beenearned by August 31. A corresponding entry of $2,325 for Cost ofGoods Sold will also need to be recorded for these sales. 6. Acount of the merchandise inventory on August 31 shows $76,560 ofinventory on hand. Instructions a) Prepare the adjusting journalentries necessary given the additional information. You may need toadd account names. Any lined paper will do but if you’d prefer,journal paper is available for printing. (10 marks) b) Prepare anadjusted trial balance at August 31. To help with this, a worksheeton Excel is available. Carrying through from your work in (a), youmay need to add account names. Submit as an Excel worksheet onepage printout. (5 marks) The columns for the income statement andbalance sheet help with the statement preparation but are optionaland do not replace the formal statements required in part (c). c)Prepare a (1) multi-step statement of income, (2) statement ofowner’s equity, and (3) classified balance sheet. Note that theowner made no additional capital contributions in the year. May bedone on Excel but submit on paper – one statement per page. (25marks) d) Prepare the closing journal entries. Any lined paper willdo but if you’d prefer, journal paper is available for printing. (2marks) e) Prepare a post-closing trial balance at August 31. May bedone on Excel but submit as one page. (3 marks)