Make Journal Entries, T-accounts, Unadjusted Trial Balance, Adjusted trial balan
ID: 2489754 • Letter: M
Question
Make Journal Entries, T-accounts, Unadjusted Trial Balance, Adjusted trial balance, Post Closing Trial balance, Multi-Step Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement of Cash Flows.
financial statements for the month ended January 31, 2015. Please use the following Chart of accounts.
CHART OF ACCOUNTS
101
Cash
230
Interest Payable
106
Accounts Receivable
301
Common Stock
110
Allowance For Doubtful Accounts
350
Retained Earnings
126
Inventory
405
Sales Revenue
128
Prepaid Insurance
406
Sales Discounts and Allowance
131
Prepaid Rent
501
Cost of Goods Sold
135
Prepaid Advertising
520
Utility Expense
163
Office Equipment
525
Wage Expense
164
Mixing Barrels
530
Interest Expense
165
Factory Equipment
535
Rent expense
190
Accumulated Depreciation
545
Insurance Expense
201
Accounts Payable
550
Bad Debt Expense
215
Notes Payable
560
Depreciation Expense
220
Line of Credit
565
Advertising Expense
225
Income Taxes Payable
570
Income Tax Expense
Company Background and Accounting Policies:
Grandpa’s Cough Inc. (GCI) sells a uniquely flavored cough syrup either wholesale or through its own storefront.
Cases contain 24 bottles. Each bottle costs the company $2 to make and the company sells bottles for $4.5. Each case is sold for $90 the cost to ship is paid for by the customer. Customers pay at the last minute of their terms unless otherwise noted.
Gene has a revolving line of credit with a local bank, if the cash balance drops below $15,000 then Gene will draw money against the line of credit in $5,000 increments, until the balance is above $25,000. Simple interest rate on the line is 3.4%. Interest accrues daily and paid at the end of each month.
The company maintains inventory at $72,000, and will purchase materials every time the inventory drops below that amount in $4,000 increments, vendor pays shipping. Terms are N/15. Gene pays all bills at the last minute.
Round all answers to the nearest dollar
Grandpa's Cough Inc.
Balance Sheet
As of December 31, 2015
Assets
Current Assets
Cash
$ 16,000
Accounts Receivable
10,000
Allowance for Doubtful Accounts
(1,000)
Inventory
50,000
Prepaid Insurance
700
Prepaid Rent
2,200
Total Current Assets
$ 77,900
Fixed Assets
Office Equipment
$ 3,500
Mixing Barrels
9,500
Factory Equipment
15,000
Less: Accumulated Depreciation
(19,860)
Total Fixed Assets
$ 8,140
Total Assets
$ 86,040
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 25,000
Interest Payable
44
Current Portion of Long Term Debt
1,600
Total Current Liabilities
$ 26,644
Long Term Debt
Notes Payable
16,000
Total Long Term Debt
16,000
Total Liabilities
$ 42,644
Stockholders' Equity
Retained Earnings
$ 28,931
Common Stock
14,465
Total Stockholders' Equity
43,396
Total Liabilities and Stockholders' Equity
$ 86,040
Date
Transaction
January 1, 2015
Gene Autry became a new owner by investing $25,000 Cash and office equipment worth $6,000 in return for common stock of Grandpa’s Cough Inc.
1
Purchased Mixing Barrels worth $3,000 and Other Factory Equipment worth $600 on credit, N/30
1
Purchased Inventory on credit for $72,000 with terms N/15
1
Paid Vendor $15,000 for prior month purchases
2
Paid $4,500 for annual premium on insurance coverage starts at the end of the month.
3
During the grand opening of the store GCI sold 256 Bottles of Cough Syrup.
4
A wholesale customer ordered 100 cases, GCI shipped the order and billed the customer 2/5 N/10
5
Received payment from customer from prior month sale $5,000.
6
Sold 300 Bottles of Cough Syrup through the store.
7
Received half the payment for sale of goods on January 4
10
Paid $4,200 for three months’ rent for store front starting on January 1, 2015.
13
Sold 400 Bottles of Cough Syrup through the store
15
Shipped order for another wholesale customer 500 cases N/10
15
Received and paid Utility Bill for $500
18
Shipped order of 300 Cases to a wholesale customer N/10
20
Sold 625 Bottles of Cough Syrup through the store
25
Shipped order to wholesale customer 1,000 cases 2/10 N/30
26
Paid for mixing barrels and equipment purchased on January 1
27
Sold 1,000 bottles of Cough Syrup through the store
30
Paid wages under the table to employees of $15,000
31
Paid $2,000 for 12 month advertising campaign through local radio stations. The campaign starts February 1st.
Additional Project information:
Ensure you are using the December 31 balance sheet for the beginning balances of your accounts.
When you are setting up your accounts use the chart of accounts included on the front page (you will not need to create any new account or account number).
Please follow the journal entry format from the first two weeks of class.
There is only one general journal where all transactions are recorded.
Pay close attention to the transactions as they are listed on page three, these are not all transactions that you will need to journalize. The accounting policies on page 1 will require you to post additional entries (it helps to keep a tickler file).
Adjusting Journal Entry Information:
The beginning balance in Prepaid Rent was for the factory as of December 31, 2015 the balance had two months remaining.
Prior Period Prepaid Insurance was for an annual policy that expires at the end of January.
The Note was borrowed on December 31, 2015 and holds interest of 3%. Interest is accrued and not paid at the end of the month. The first principle payment is due in the month of June.
GCI wrote off $5,000 of bad debt at the end of the month, and used the aging of receivables method to estimate the allowance for doubtful accounts to be $10,000
All depreciation is straight-line with no residual value.
Office equipment is expected to last 5 years
Factory Equipment is expected to last 4 years
Mixing barrels are expected to last 10 years.
Assume the income tax rate for GCI is 15%.
CHART OF ACCOUNTS
101
Cash
230
Interest Payable
106
Accounts Receivable
301
Common Stock
110
Allowance For Doubtful Accounts
350
Retained Earnings
126
Inventory
405
Sales Revenue
128
Prepaid Insurance
406
Sales Discounts and Allowance
131
Prepaid Rent
501
Cost of Goods Sold
135
Prepaid Advertising
520
Utility Expense
163
Office Equipment
525
Wage Expense
164
Mixing Barrels
530
Interest Expense
165
Factory Equipment
535
Rent expense
190
Accumulated Depreciation
545
Insurance Expense
201
Accounts Payable
550
Bad Debt Expense
215
Notes Payable
560
Depreciation Expense
220
Line of Credit
565
Advertising Expense
225
Income Taxes Payable
570
Income Tax Expense
Explanation / Answer
Date Account title Debit Credit 2015, January 1 Cash 25,000 Office Equipment 6,000 To Common Stock 31,000 1 Mixing Barrels 3,000 Factory Equipment 600 To Accounts Payable 3,600 1 Inventory 72,000 To Accounts Payable 72,000 1 Accounts Payable 15,000 To Cash 15,000 2 Prepaid Insurance 4,500 To Cash 4,500 3 Cash 1,152 To Sales Revenue 1,152 4 Accounts Receivable 9,000 To Sales Revenue 9,000 5 Cash 5,000 To Accounts Receivable 5,000 6 Cash 1,350 To Sales Revenue 1,350 7 Cash 4,410 Discount allowed 90 To Accounts Receivable 4,500 10 Prepaid Rent 4,200 To Cash 4,200 13 Cash 1,800 To Sales Revenue 1,800 15 Accounts Receivable 45,000 To Sales Revenue 45,000 15 Utility Expense 500 To Cash 500 18 Accounts Receivable 27,000 To Sales Revenue 27,000 20 Cash 2,813 To Sales Revenue 2,813 25 Accounts Receivable 90,000 To Sales Revenue 90,000 26 Accounts Payable 3,600 To Cash 3,600 27 Cash 4,500 To Sales Revenue 4,500 30 Wages 15,000 To Cash 15,000 31 Prepaid Advertising 2,000 To Cash 2,000 Adjusting entries: Insurance 4,125 To Prepaid Insurance 4,125 rent 4,200 To Prepaid Rent 4,200 Advertising expense 1,833 To Prepaid Advertising 1,833
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