can someone help me with the JOURNAL ENTRIES and Adjusting Journal Entries PLEAS
ID: 2404734 • Letter: C
Question
can someone help me with the JOURNAL ENTRIES and Adjusting Journal Entries PLEASE!!
Adjustment information as of January 31, not already given in the original transaction(s):
1. Based on prior experience, GBI estimates that approximately 1.5 % of the credit sales from each month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on the percentage of credit sales as an adjusting entry each month.
2. As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the finished goods inventory was taken at the end of January. It was determined that the value of the finished goods merchandise on hand was $1,200.
3. GBI counted the office (operating) supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $1000.
4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2013, with no salvage value. The bar-code system has a 5-year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets placed in service in the first half of the months are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence).
5. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the Internet report, the amount to be billed by the utilities company for January usage is the same as was billed for December.
6. Liability insurance for the six-month period ending on January 31 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the sixmonth policy period.
7. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing, office, and administrative payrolls and assume all wages expense is towards labor expense.)
Account Balances as of December 31st
Debit Balance
Credit Balance
100000
Bank Account
$300,318
110100
Accounts Receivable (Direct Posting Account)
94,670
110150
Allowance for Bad Debts
2,600
200600
Inventory-Operating Supplies
8,832
200900
Inventory-Raw Materials (Direct Post)
52,000
200910
Inventory-Finished Goods (Direct Post)
281,298
200920
Inventory-Trading Goods (Direct Post)
66,474
210000
Prepaid Insurance
3,000
212000
Prepaid Advertising
2,400
220110
Land (Direct Post)
528,000
220210
Production Machinery, Equip & Fixtures (Dir.Post)
915,000
220310
Accumulated Depreciation-Machinery (Direct Post)
408,000
300200
Accounts Payable (Direct Posting Account)
48,000
300700
Payables-Salaries and Wages
94,313
300800
Accrued Expenses
2,200
320000
Accrued Tax – Output
4,000
329000
Common Stock
1,010,000
329100
Additional Paid-in-Capital
52,870
330010
Retained Earnings (Direct Posting)
630,009
Events During January
Event Date Description of Event
1
January 3
Employees are paid monthly on the first business day of the month for work done in the previous month. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks.
2
GBI received $60,000 in safety product inventory and $40,000 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $100,000 are net 10 days. GBI paid the CWX shipping company $1400 with a manual check for the shipment of the goods base on the weight. The bill of lading showed that the safety product inventory arrived in 5 boxes with an average weight of 40 lbs per box. and the raw materials came on a pallet and weighed 300 lbs.
3
Windy City Bikes in Chicago, IL ordered $22,500 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,000. The goods were shipped to Windy City immediately via UPS using Windy City’s UPS shipping number. The terms of payment for Windy City’s order are 3/10 net 30 days.
4
January 7
GBI received payment of $24,000 from Northwest Bikes in Seattle, WA for the balance due on their account.
5
January 10
GBI’s account on the utility company website is updated at the end of each month when the meter is read. GBI uses this data to accrue the expenses at the end of each month (in this case on December 31st.) This allows recognition of the expense in the correct period. Expenses are usually accrued at the end of the month as “Accrued Expenses”. GBI paid the December utility bill via the company’s automatic electronic bill pay program.
6
GBI’s advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of August for six months of advertising, September through February, (Four months of advertising have already been used.)
7
January 11
The office manager in San Diego ordered $380 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI’s office. GBI has an account with Staples and payment terms are net 10. Operating supplies expense is figured at the end of the month determined by the amount of supplies used during the month.
8
GBI ordered $75000 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30.
9
GBI received payment from Windy City Bikes for their order from January 3. Windy City paid the invoice amount less the discount for paying within 10 days.
10
January 12
GBI paid for the inventory order (via bank transfer) that they received from Dallas Bike Basics back on January 3.
11
January 13
In order to better track inventory, GBI ordered a bar-coding and tracking system which will be installed and tested by Computer Specialists, Inc. (CSI). The system will allow employees to track inventory using mobile devices and special software which will link into their new computerized accounting system. The barcode system costs $6,000 (including sales tax) and CSI will charge GBI $1,300 for the installation and tests. GBI paid a deposit of $2,500 on the system and the remainder is due and payable when the system is installed. GBI will classify the bar-coding system as “Production Machinery, Equipment and Fixtures”.
12
January 17
GBI paid an invoice from Lightbulb Accessory Kits for ordered goods that were received on December 20. The amount of the invoice from Lightbulb is $15,890 due net 30.
13
The city of Denver will be hosting a decathlon at the end of February. The event is expected to create demand for high quality bikes. Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,000 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $78,000. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes. Because Rocky Mountain is a good customer, GBI is giving them special terms of net 45 days on this order.
14
GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $600 were included in the invoice from Space Bike.
15
GBI received notice that Bunky’s Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $4,200 that Bunky’s owed them.
16
January 18
GBI received a $90,000 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account.
17
January 19
GBI paid Staples for the office supplies they received January 11.
18
SoCal Bikes in Irvine, CA placed an order for $2,750 in bicycle helmets for a special event in February. The merchandise cost GBI $1,300. SoCal sent a truck to the GBI distribution center in San Diego, CA and picked up the merchandise directly from GBI’s warehouse. Terms of payment are net 30. (Don’t forget to charge sales tax of 7.75% for this order.)
19
January 24
Beantown Bikes in Boston, MA placed an order with GBI for $27,000 in bicycles. The cost of the bicycles is $17,000. Beantown Bikes is a new customer. Its buyers saw GBI’s booth at a trade show. Because Beantown is a new customer, they must either wait until their credit can be approved or pay for the order before GBI will ship the bikes to them.
20
January 25
GBI has been offered the opportunity to advertise in the Bicycle Times online magazine for a reduced price if they pay for three months in advance. In light of the upcoming Tour de France, the advertising is a great opportunity for GBI to get additional recognition. The advertising will start in February. GBI wrote a check for $9,000 for three months of advertising.
21
January 26
GBI received notification from their bank that Beantown Binkes had transferred funds into their account for their prior order, so GBI’s warehouse personnel shipped Beantown’s order. Beantown will be responsible for paying Fed-X $400 for shipping the order.
22
January 27
The county approved GBI’s building plans for their new warehouse. Estimated building costs are $1,300,000 which will be funded via a mortgage from Bank of America. GBI plans to break ground on the new building April 18th of this year.
23
GBI sent a $32,000 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th.
24
Big Apple Bikes in New York City is expanding to another location in New York and needs to stock the new location. GBI received a phone order from Big Apple for $250,000 in bicycles and $108,500 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $185,000 and the cost of the accessories is $65,000. Big Apple will have a contract trucking company pick up the order when it is ready. The order is sent to GBI’s warehouse for picking and packing, which may take a couple days. Payment terms to Big Apple for this order are net 30.
25
January 31
GBI pays sales tax once a quarter via the state’s electronic filing and payment system. GBI filed its return and paid its sales tax for the quarter ending December 31.
26
GBI paid February’s rent of $4,000 for the office and warehouse space in San Diego.
27
CSI installed and tested the new barcode system. The warehouse manager approved the installation and commented that she thinks it works great. GBI wrote a check to CSI for the balance owed and gave it to the installer.
28
Big Apple’s truck arrived at GBI’s warehouse and picked up the order from January 27th.
Debit Balance
Credit Balance
100000
Bank Account
$300,318
110100
Accounts Receivable (Direct Posting Account)
94,670
110150
Allowance for Bad Debts
2,600
200600
Inventory-Operating Supplies
8,832
200900
Inventory-Raw Materials (Direct Post)
52,000
200910
Inventory-Finished Goods (Direct Post)
281,298
200920
Inventory-Trading Goods (Direct Post)
66,474
210000
Prepaid Insurance
3,000
212000
Prepaid Advertising
2,400
220110
Land (Direct Post)
528,000
220210
Production Machinery, Equip & Fixtures (Dir.Post)
915,000
220310
Accumulated Depreciation-Machinery (Direct Post)
408,000
300200
Accounts Payable (Direct Posting Account)
48,000
300700
Payables-Salaries and Wages
94,313
300800
Accrued Expenses
2,200
320000
Accrued Tax – Output
4,000
329000
Common Stock
1,010,000
329100
Additional Paid-in-Capital
52,870
330010
Retained Earnings (Direct Posting)
630,009
Explanation / Answer
Event Date Account Titles and Explanation Debit Credit 1) Jan.3 Payables - Salaries and Wages $94,313.00 Bank Account $94,313.00 To record salary for december paid) 2) Jan.3 Inventory-Trading Goods (Direct Post) $60,000.00 Inventory-Raw Materials (Direct Post) $40,000.00 Accounts Payable $100,000.00 To record received merchandise and raw materials inventory Jan. 3 Inventory-Trading Goods (Direct Post) = $1400/340 X 40 $164.71 Inventory-Raw Materials (Direct Post) = $1400/340 x 300 $1,235.29 Bank $1,400.00 To record Shipping charges paid for the above cosignment 3) Jan.3 Accounts Receivable (Direct Posting Account) $22,500.00 Sales Revenue $22,500.00 To record the sold merchandise on account Cost of Goods Sold $15,000.00 Inventory-Trading Goods (Direct Post) $15,000.00 To record cost of goods sold 4) Jan.7 Bank Account $24,000.00 Accounts Receivable (Direct Posting Account) $24,000.00 To record cash received on account 5) Jan.10 Accrued Expenses $2,200.00 Bank Account $2,200.00 To record paid accrued utility expenses 6) Advertising Expense $2,400.00 Prepaid Advertising $2,400.00 To record advertising expense 7) Jan.11 Inventory - Operating Supplies $380.00 Accounts Payable $380.00 (Operating supplies bought from Staples) 8) Jan.11 No entry required 9) Jan.11 Bank Account $21,825.00 Sales Discount 675 Accounts Receivable 22500 (Payment received from Windy City Bikes) 10) Jan.12 Accounts Payable $100,000.00 Bank Account $100,000.00 (Payment made to Dallas Bike Basics) 11) Jan.13 Production Equipment,Machinery and fixtures $7,300.00 Bank Account $2,500.00 Accounts Payable $4,800.00 (Barcoding system purchased) 12) Jan.17 Accounts Payable $15,890.00 Bank Account $15,890.00 (Payment made to Lightbulb Accessory kits ) 13) Jan.17 Accounts Receivable $128,000.00 Sales Revenue $128,000.00 (Sale of bikes to Rocky Mountain Bikes) Cost of goods sold 78000 Inventory - Finished Goods 78000 (Cost of bikes cold to Rocky Mountain Bikes) 14) Inventory - Raw Material $75,600.00 Accounts Payable $75,600.00 (Raw materil inventory received from Space Bike composites) 15) Allowance For Bad Debts $4,200.00 Accounts Receivable $4,200.00 (Amount due from Bunky's Bicycle Emporium written off) 16) Jan.18 Bank Account $90,000.00 Accounts Receivable $90,000.00 (Payment received from Silicon Valley Bikes) 17) Jan.19 Accounts Payable $380.00 Bank Account $380.00 (Payment made to Staples) 18) Accounts Receivable $2,963.13 Sales Revenue $2,750.00 Accrued Tax - Output $213.13 (Bicycle helmets sold to SoCal Bikes) Cost of goods sold $1,300.00 Inventory - Trading Goods $1,300.00 (Cost of helmets sold to SoCal) 19) Jan.24 Bank Account $27,000.00 Accounts Receivable $27,000.00 (Payment received from Beantown Bikes against their order) Accounts Receivable $27,000.00 Sales Revenue $27,000.00 (Sale of goods to Beantown Bikes against their payment) Cost of goods sold $17,000.00 Inventory - Finished Goods $17,000.00 (Cost of bicycles sold to Beantown) 20) Jan.25 Prepaid Advertising $9,000.00 Bank Account $9,000.00 (Payment made for 3-month advertising contract) 21) Jan.26 No entry required 22) Jan.27 No Entry Required 23) Accounts Payable $32,000.00 Bank Account $31,000.00 (Payment made to Night Rider Aluminium Products) 24) No Entry 25) Jan.31 Accrued Tax - Output $4,000.00 Bank Account $3,000.00 (Payment of sales tax due for quarter ending December) 26) Prepaid Rent $4,000.00 Bank Account $4,000.00 (Payment of rent for February) 27) Accounts Payable $4,800.00 Bank Account $4,800.00 (Balance payment made for barcode system) 28) Accounts Receivable $358,500.00 Sales Revenue $358,500.00 (Goods sold to Bigg Apple) Cost of goods sold $250,000.00 Inventory - Finished Goods $250,000.00 Inventory - Trading Goods (Cost of goods sold to Big Apple)
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