This problem continues the Canyon Canoe Company situation and focuses on non merchandising transactions, adjusting and closing entries, and preparing financial statements. Canyon Canoe Company does not typically prepare adjusting and closing entries each month, but the company is surprised at how popular the shirts are and wishes to know the net income for January and would also like to understand how to prepare the closing entries for a merchandising company.
During January 2025, Canyon Canoe Company completed the following non-merchandising transactions:

Requirements
1. Journalize and post the January transactions. Omit explanations. Use the ledger from the previous problem for posting.
2. Journalize and post the adjusting entries for the month of January. Omit explanations. Denote each adjustment as Adj. Compute each account balance, and denote the balance as Balance. In addition to the adjusting entries from the data from previous chapters, Canyon Canoe Company provides this data:
a. A physical count of the inventory at the end of the month revealed the cost was $470.
b. The company estimated sales returns will be $30 with a cost of $15.
c. Office supplies used, $55.
d. The Unearned Revenue has now been earned.
e. Interest expense accrued on the notes payable, $50.
3. Prepare the month ended January 31, 2025, single step income statement of Canyon Canoe Company.
4. Journalize and post the closing entries. Omit explanations. Denote each closing amount as Clo. and each balance as Balance. After posting all closing entries, prove the equality of debits and credits in the ledger by preparing a post-closing trial balance.
5. Compute the gross profit percentage for January for Canyon Canoe Company.

Transcribed Image Text:

Jan. 2 15 15 18 20 Collected $4,500 on account. Paid the utilities and telephone bills from December. Paid the wages accrued in December. Rented canoes and received cash, $1,825. Received bills for utilities ($360) and telephone ($275), which will be paid later. 23 Paid various accounts payable, $1,800. 30 Paid employee, $750.