1. Record the daily transactions if appropriate, (some events may not involve journal entries)

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 $70,000 in safety product inventory and $30,000 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 $1000 with a manual check for the shipment of the goods. The bill of lading showed that the safety product inventory arrived in 6 boxes with a total weight of 50 lbs. and the raw materials came on a pallet and weighed 60 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 Citys UPS shipping number. The terms of payment for Windy Citys order are 3/10 net 30 days.
4	January 7	GBI received payment of $22,000 from Northwest Bikes in Seattle, WA for the balance due on their account.
5	January 10	GBIs 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 companys automatic electronic bill pay program.
6		GBIs 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	GBI received their new product catalogs ordered from a local print shop. The print shop billed GBI $6,000 for 5,000 catalogs with payment terms of net 10. GBI considers catalogs as advertising and expenses the catalogs at the end of the month based on how many catalogs are sent out 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	The owners of GBI were talking to the owner of the warehouses that they lease. They are good friends. The conversation centered around wise investment of the excess cash that GBI presently has. The owner of the warehouses stated that he wishes to diversify his investments, especially with the flat real estate market. He suggested that GBI purchase the warehouses. He said that he would give GBI a good deal. GBI decided to buy only one of the warehouses and continue to lease the other one. The price is to be $360,000 with a down payment of 20%. The original owner will carry a mortgage for the remainder with an interest rate of 7.5%. Title is to transfer on March 15. Today GBI sent earnest money of $10,000 to the owner of the warehouse.
12		GBI applied for credit with a new supplier, Cycle Partner U.S.A. A credit application was faxed to CPs headquarters in San Antonio, TX. GBI is anticipating an order with HP for $12,000 in resale merchandise.
13	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.
14		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 $78000. 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.
15		GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $600 were included in the invoice from Space Bike.
16		GBI received notice that Bunkys Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $3,350 that Bunkys owed them.
17	January 18	GBI received a $90,000 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account.
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 GBIs warehouse. Terms of payment are net 30. (Dont forget to charge sales tax of 8.25% 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 GBIs booth at a trade show. Because Beantown is a new customer without credit, 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 GBIs warehouse personnel shipped Beantowns order. Beantown will be responsible for paying Fed-X $400 for shipping the order.
22	January 27	The county approved GBIs building plans for their new warehouse. Estimated building costs are $1,100,000 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 $28,000 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 $230,000 in bicycles and $108,500 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $170000 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 GBIs 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 states electronic filing and payment system. GBI filed its return and paid its sales tax for the quarter ending December 31.
26		GBI paid Februarys rent of $4,000 for the office and warehouse space in San Diego.
27		Big Apples truck arrived at GBIs warehouse and picked up the order from January 27th.

2. The next step is to record the adjusting entries

Adjustment information as of January 31, not already given in the original transaction(s):

1. Based on prior experience, GBI estimates that approximately 1/2% of the net sales (gross sales minus returns minus discounts) for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts 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 trading goods merchandise on hand was $49,000.

3. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2013, with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired 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).

4. GBI received a $2,251 bill from PG&E for utilities consumed during January and the January AT&T bill in the amount of $412.

5. Liability insurance for the six-month period ending on February 28 was paid last September on the first of the month. Liability insurance is assumed to be utilized uniformly over the six-month policy period.

6. 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 and assume all labor costs will be expensed.)

7. 500 product catalogs were sent out in the month of January.