ezto.mheducation.c https://www.mor W Assignments: ACTG 2010 WSU Spr Exam 2 suppl
ID: 2554769 • Letter: E
Question
ezto.mheducation.c https://www.mor W Assignments: ACTG 2010 WSU Spr Exam 2 supplemental assignment One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Uneamed Revenue (30 units) Accounts Payable Notes Payable (long-term) Common Stock Retained Eamings 18,620 9,650 900 2,800 4,350 1,300 15,000 5,000 4,520 credit balance. The following information is relevant to the first month of operations in the following year OTP will sell inventory at $145 per unit. OTP's January 1 inventory balance consists of 35 units at a total cost of $2,800. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $4,350 payment for 30 units to be delivered in January: this obligation was recorded in Unearned Revenue. Rent of $1,300 was unpaid and recorded in Accounts Payable at December 31 OTPs noto payable matures in three years, and accrues interest at a 10% annual rate. . January Transactions 1. included in OTP's January 1 Accounts Receivable balance is a $1,500 balance due from Jeff Letrotsk 2 OTP paid a $500 insurance premium on 01/02, covering the month of January, the payment is 4. OTP paid a courier $300 cash on 01/05 for same-day delivery of the 150 units of inventory Jeff is harving cash fow problems and cannot pay the $1,500 balance at this time. On 01/01, OTP arranges with Jeff to convert the S 1 .500 balance to a 6-month note, at 12% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on 1 of this year orP purchased an aosionial 150 unitis of niventory from a suppliar on account on 01/05 at a total cost units of of $9,000, with terms 2/15, n/30. 5. The 30 units that OTP's customer pald for in advance in December are delivered to the customer on 01/06 6. On 01/07, OTP paid the amount nacessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (n 3) 7. Sales of 40 units of inventory ocouring during the period of 01/07-01/10 are recorded on 01/10. The saies terms are 2/10, n/30 8. Collectod payments on 01/14 from sales to customers recordod on 01/10. The discount was property aken by customers on $5,800 of these credit sales:; consequently, OTP received less than $$,800. 9. OTP paid the first 2 weeks wages to the employees on 01/16. The total paid is $2,200 10. Wrote off a $1,000 customer's account balance on 01/18 OTP uses the allowance method, not the acBo escExplanation / Answer
Working:
ONE TRICK PONY Income Statement for the month ending January 31 Sales 17400 Sales discount 116 Net sales 17284 Cost of goods sold 8070 Gross Profit 9214 Expenses: Wages 4400 Rent Expense 1300 Insurance expense 500 Utility expense 400 Bad debt 852 Total Expenses 7452 Operating income 1762 Interest Revenue 15 Net income 1777Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.