slove for journal entries and adjusting journal entries RSTons CASE STUDY Events

Question

slove for journal entries and adjusting journal entries RSTons CASE STUDY Events During January Event Date 1 January 4 Employees are paid monthly on the first business day of the month for work done in the previous month. The total payroll for the previous month is $98,000. (lgnore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks 2 January5 GBI paid $87,520 for an invoice for raw materials received December 10th from Dallas Bikes Basics. Terms of payment are net 30 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 $9,100 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,950 on the system today 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 4 January 7 GBI received a $124,265 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account Northwest Bikes in Seattle, WA ordered $70,500 of bicycles from GBl. The cost of the bicycles (to GBI) is $46,400. The goods were shipped to Northwest immediately via common carrier and the shipping costs will be paid by Northwest Bikes. The terms of payment for Northwest Bikes order are 2/10 net 30 days 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 of $2,056 via the company's automatic electronic bill pay program. GBI received $81,043 in raw materials from Space Bike Composites 5 January 8 6 January 11 TOUENnin Houston, TX. This inventory was ordered on December 28. The 7shipping company $754 with a manual check for the shipment of the payment terms for the invoice total of are net 10 days. GBI paid the goods New warehouse shelving ordered in November of last year was delivered and installed this week. The installation was completed and the warehouse manager sign off on the job today. Upon 8 January 13 completion the installers submitted an invoice to GBI for the cost of Page 9 O SAP AG

Explanation / Answer

Journal entries Event Date Account Title Debit Credit 1 Jan.4 Salaries Payable 98000 Cash 98000 (Salaries for December paid) 2 Jan.5 Accounts Payable 87520 Cash 87520 (On account payment to Dallas Bikes Basics) 3 Production machinery, equipment and fixtures 10300 Cash 3950 Accounts Payable 6350 (Bar coding system purchased from computer specialists Inc.) 4 Jan.7 Cash 124265 Accounts Receivable 124265 (Funds transfer received from Silicon Valley Bikes on their a/c) 5 Jan.8 Accounts Receivable 70500 Sales 70500 (Sales on account to Northwest Bikes) Cost of Goods Sold 46400 Inventory - Finished Goods 46400 (Cost of the goods sold to Northwest Bikes) 6 Jan.11 Accrued Expenses 2056 Cash 2056 (Utility bill for December paid) 7 Inventory - Raw material 81043 Accounts Payable 81043 (Raw material received from Space Bikes Composites) Inventory - Raw material 754 Cash 754 (Shipping expenses for the raw materisl received) 8 Jan.13 Production machinery, equipment and fixtures 24600 Accounts Payable 24600 (Cost of shelving for warehouse installed) 9 Jan.14 No entry required 10 Jan.14 Cash 69090 Sales Discount 1410 Accounts Receivable 70500 (Payment received from Northwest Bikes) 11 Jan.15 Inventory - Raw material 49508 Inventory - Finished Goods 68584 Accounts Payable 118092 (Receipt of goods ordered on Jan.14 from Dallas Bikes Basics) 12 Jan.19 Accounts Payable 81043 Cash 81043 (Payment made to Space Bikes Composites) 13 Jan.19 Prepaid Advertising 6000 Cash 6000 (Payment for advertising from Feb. Thru May) 14 Jan.19 Allowance for doubtful accounts 1515 Accounts Receivable 1515 (Write off of the amount due from Bunky's) 15 Jan.20 Cash 119264 Accounts Receivable 119264 (Amount received from Silicon Valley Bikes) 16 Jan.20 Accounts Payable 24600 Cash 24600 (Payment made for amount due on wahrehousing shelving) 17 Jan.22 Accounts Receivable 3240 Sales 3000 Sales Tax payable 240 (Sales helmets on account) Cost of Goods Sold 1802 Inventory - Traded goods 1802 (Cost of helmets sold ) 18 Jan.22 No entry required 19 Jan.25 Accounts Receivable 132745 Sales 132745 (Sale to Rocky Mountain Bikes) Cost of Goods Sold 79647 Inventory - Finished Goods 79647 (Cost of the bikes sold to Rocky Mountains Bikes) 20 Jan.26 Inventory - Traded goods 59992 Accounts Payable 59992 (Purchase of accessories from Dallas Bike Basics) 21 Jan.26 Accounts Payable 18340 Cash 18340 (Payment made to Lightbulb on account) 22 Jan.27 No entry required 23 Jan.27 Accounts Payable 37890 Cash 37890 (Payment made to Night Rider Aluminium Products) 24 Jan.28 Office Supplies 304 Accounts Payable 304 (Office supplies purchased from Office Depot) 25 Jan.28 No entry required 26 Jan.29 Accured Tax - Output 2158 Cash 2158 (Sales tax for the quarter ended Dec.31) 27 Jan.29 Prepaid Rent 10000 Cash 10000 (Payment of rent for February) 28 Jan.29 Accounts Receivable 340805 Sales 340805 (Sale to Big Apples Bikes) Cost of Goods Sold 234680 Inventory - Traded goods 169586 Inventory - Finished Goods 65094 (Cost of the goods sold to Big Apples Bikes)

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