BUS 320 Financial Reporting Project Bean Counters Inc. Requirements Step 1: Adju

Question

BUS 320 Financial Reporting Project Bean Counters Inc. Requirements Step 1: Adjusting and coecting jounal entries as of 7.31- 18 (the fiscal year end). Prepare the adjusting entries (including the income tax adjustment) on a separate sheet of paper. Submit the Income Tax Adjustment Worksheet with your entries If the company would have already recorded a transaction during the year do not record it again. Adjusting entries never involve cash. Step 2: 12 column spread sheet. (See Canvas for Excel spreadsheet.) Bean Counters Inc. is a San Francisco-based retailer and roaster of specialty coffee products. These products are sold in the company's own web site and by other retailers. The fiscal year end is July 31 and the accounts for the year ended 7-31-18 are unaudited. The company's routine adjusting procedures have been completed. The available information consists of the preliminary adjusted accounts and additional information about the company's accounting policies. Information about the company's accounting policies and unresolved issues: A. Additional office space was rented on April 1,2018 and is for one year's occupancy B. Employees are paid every Friday. July 31, 2018, is a Tuesday. Salaries total $15,000 for a five day work week. C. Inventory is accounted for using the weighted average method. costing $30,000 were included in the physical inventory count in Cases of coffee beans the morning on the loading dock. They were counted again in the afternoon once t were moved to the warehouse. Total inventory at the beginning of the year was S450,000.

Explanation / Answer

Addl. Adjustment Entries: Debit Credit A. Rent expense 50000 Prepaid Rent 50000 (150000/12*4) B. Salary expense 8571 Salary payable 8571 (15000/7*4 days--Sat.--Tues.) C. COGS 30000 Inventory 30000 (To rectify double-counting of closing inventory) D. Depreciation Expense-Equipment 10000 Acc. Depn. Expense-Equipment 10000 (Prior-year item) E. Co. would have recorded-No Entry reqd. F. Interest expense 2000 Interest payable 2000 (400000*6%)-22000 G. Unearned Gift Card Revenue 300000 Sales 300000 (470000-170000) H. Co. would have recorded-No Entry reqd. I. No adj. Entry reqd. J. No adj. Entry reqd. K. Income tax expense 59829 Income tax payable 59829 Income tax expense adjustment worksheet Income before tax from Income Statement 900000 Adjustments that Impact Income A.Rent expense -50000 B. Salary Expense -8571 C. COGS -30000 D. Prior-year depn. -10000 F. Interest on Note payable -2000 G. Sales 300000 199429 Corrected Income before Income tax 1099429     * Tax rate 30% Correct Income tax expense 329829 Less: Recorded Income tax expense -270000 Amount of Income tax adjustment 59829

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