Account # Account Title 100000 Bank Account 101000 Alternate Bank Account 110000 Trade Accounts Receivable 110100 Miscellaneous Accounts Receivable (Direct Post) 110200 Interest Receivable 110400 Allowance for Bad Debt 200000 Inventory-Raw Materials 200100 Inventory-Finished Goods 200200 Inventory-Trading Goods 200300 Inventory-Semi-finished Goods 200400 200500 200600 200900 Inventory-Raw Materials (Direct Post) 200910 200920 Inventory-Production Supplies Inventory-Suspense (Heaven) Inventory-Operating Supplies Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) 210000 Prepaid Insurance 211000 Prepaid Supplies 212000 Prepaid Advertising 215000 Prepaid Rent 216000 Deposits on Purchases 220000 Notes Receivable 220050 Fixed Assets 220060 220100 Land 220110 Land (Direct Post) 220200 220210 220300 220310 220400 Office Furniture 220500 220600 220700 220800 220900 221100 221200 300000 300100 300200 300300 Accumulated Depreciation-Assets Property, Plant & Equipment Property, Plant & Equipment (Direct Post) Accumulated Depreciation-Property, Plant & Equip. Accumulated Depreciation-PP&E (Direct Post) Accumulated Depreciation-Office Furniture Office Equipment & Computers Accumulated Depreciation-Office Equipment & Comp. Vehicles Accumulated Depreciation-Vehicles Intangible Assets Accumulated Amortization-Intangible Assets Payables-Trade Accounts Payables-Income Taxes Payables-Miscellaneous (Direct Post) Payables-Interest 300400 Notes Payable-Short-Term 300500 300600 Notes Payable-Long-Term Payables-Commissions Page < 5 > of 24 ZOOM + 300700 300800 Payables-Salaries and Wages Accrued Expenses 310000 Goods Receipt / Invoice Receipt Account 320000 Accrued Tax-Output 321000 Accrued Tax-Input 322000 Unearned Revenues 329000 Common Stock 329100 330000 Retained Earnings 330100 Additional Paid-in-Capital Retained Earnings (Direct Posting) 600000 Sales Revenue 610000 Sales Discounts 620000 630000 640000 650000 650100 700000 720000 720100 720200 720300 740000 740100 740200 740300 Rent Expense 740400 740500 740600 740700 Sales Expense 740800 Miscellaneous Revenue Revenue Deductions Gain or Loss on Sale of Assets Customer Service Revenue Customer Service Revenue Settlement Labor Expense Raw Material Consumption Expense Finished Product Consumption Expense Trading Good Consumption Expense Semi-Finished Consumption Expense Supplies Expense Telecommunications Expense Legal & Professional Expense Insurance Expense Payroll Expense-Office Payroll Expense-Administrative Property Tax Expense 740900 Income Tax Expense 741000 741100 Miscellaneous Expense Warranty Expense 741200 Bad Debt Expense 741300 741500 Utilities Expense 741600 741700 741800 741900 760000 Purchase Price Variance 760100 770000 Information Technology Expense Manufacturing Output Settlement Manufacturing Output Settlement Variance Depreciation Expense Advertising Expense Production Variance Research and Development Expense 780000 Cost of Goods Sold Page < 6 > of 24 ZOOM + Event Date 1 January 3 2 January 3 3 January 3 4 January 7 5 January 10 6 January 10 7 January 11 8 January 11 Page 13 > of 24 ZOOM + Description of Event 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 $110,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks. GBI received $55,692 in safety product inventory and $37,128 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $92,820 are net 10 days. GBI paid the CWX shipping company $550 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 120 lbs. and the raw materials came on a pallet and weighed 100 lbs. Windy City Bikes in Chicago, IL ordered $22,000 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,180. The goods were shipped to Windy City immediately via UPS using Windy City's UPS shipping number. The terms of payment for Windy City's order are 2/10 net 30 days. GBI received payment of $16,850 from Little 500 Bicycles in Bloomington, IN for the balance due on their account. 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 31**.) 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 $988 via the company's automatic electronic bill pay program. GBI's advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of July for six months of advertising, August through January, (Five months of advertising have already been used). The office manager in San Diego ordered $350 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI's office. GBI has an account with Staples and payment terms are net 10. Operating supplies expense is figured at the end of the month determined by the amount of supplies used during the month. GBI ordered $99,418 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30. 9 January 11 10 January 12 11 January 13 12 January 17 13 January 17 14 January 17 15 January 17 16 January 18 17 January 19 18 January 19 Page 14 > of 24 ZOOM + 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. GBI paid $92,820 via bank transfer for the inventory order that they received from Dallas Bike Basics January 3. 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 $5,995 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,000 on the system 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". 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 $17,010 due net 30. 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 $128,130 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $79,441. 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. GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $802 were included in the $100,220 invoice from Space Bike. GBI received notice that Larry's Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,610 that Larry's owed them. GBI received a $89,960 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. GBI paid Staples for the office supplies they received January 11. SoCal Bikes in Irvine, CA placed an order for $2,300 in bicycle helmets for a special event in February. The merchandise cost GBI $1,380. SoCal sent a truck to the GBI distribution center in San Diego, CA and picked up the merchandise directly from GBI's warehouse. Terms of payment are net 30. (Do not forget to charge sales tax of 8.75% for this order.) 19 January 24 20 January 25 21 January 26 22 January 27 23 January 27 Page < 15 > of 24 ZOOM + Beantown Bikes in Boston, MA placed an order with GBI for $27,450 in bicycles. The cost of the bicycles is $17,092. Beantown Bikes is a new customer. Its buyers saw GBI's booth at a trade show. Because Beantown is a new customer, they must either wait until their credit can be approved or pay for the order before GBI will ship the bikes to them. 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. Considering 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 $15,000 for three months of advertising. GBI received notification from their bank that $27,450 had been transferred to their account from Beantown Bikes, so GBI's warehouse personnel shipped Beantown's order. Beantown will be responsible for paying Fed-X $360 for shipping the order. The county approved GBI's building plans for their new warehouse. Estimated building costs are $1,050,000 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. GBI sent a $30,890 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th. 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 $232,315 in bicycles and $108,490 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $169,586 and the cost of the accessories is $65,094. Big Apple will have a contract trucking company pick up the order when it is ready. The order is sent to GBI's warehouse for picking and packing which may take a couple days. Payment terms to Big Apple for this order are net 30. GBI pays sales tax once a quarter via the state's electronic filing and payment system. GBI filed its return and paid $3,063 in sales tax for the quarter ending December 31. GBI paid February's rent of $4,500 for the office and warehouse space in San Diego. CSI installed and tested the new barcode system. The warehouse manager approved the installation and commented that she thinks it works great. GBI wrote a check to CSI for $4,195 and gave it to the installer. Big Apple's truck arrived at GBI's warehouse and picked up the order from January 27th 24 January 27 25 January 31 26 January 31 27 January 31 28 January 31 Page < 16 > of 24 ZOOM + Adjusting Journal Entry information as of January 31: Item Description of Event 1 2 3 4 5 6 7 Based on prior experience, GBI estimates that approximately 1% of the net credit sales (gross credit sales minus returns of credit sales) 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. 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 trading goods inventory was taken at the end of January. It was determined that the value of the trading goods merchandise on hand was $40,710. GBI counted the office supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $620. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2008, are expected to last 15 years with no salvage value. The bar-code system has a 5-year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month 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 monthly (i.e., number of days in the month is not of consequence). GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $1,046. Liability insurance for the six-month period ending on February 28 in the amount of $15,000 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six-month policy period. 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.) 8 GBI needs to recognize $4,500 of rent expense that had been prepaid