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

1. Based on prior experience, GBI estimates that approximately 12 % 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.

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 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.

3. 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.

4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2015, 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 on a monthly basis (i.e. number of days in the month is not of consequence).

5. 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.

6. 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.

7. 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.)

Account Balances as of December 31, 2018 debit credit

100000 Bank Account 252,518 110100 Accounts Receivable (Direct Posting Account) 108,420 110150 Allowance for Bad Debtg 2,500 200600 Inventory-Operating Supplies 750 200900 Inventory-Raw Materials (Direct Post) 32,000 200910 Inventory-Finished Goods (Direct Post) 281,298 200920 Inventory-Trading Goods (Direct Post) 66,474 210000 Prepaid Insurance 5,000 212000 Prepaid Advertising 1,000 220110 Land (Direct Post) 425,000 220210 Production Machinery, Equip & Fixtures(Dir.Post) 915,000 220310 Accumulated Depreciation-Machinery (Direct Post) 305,000 300200 Accounts Payable (Direct Posting Account) 47,900 300700 Payables-Salaries and Wages 110,000 300800 Accrued Expense 988 320000 Accrued Tax Output 3,063 329000 Common Stock 1,000,000 330010 Retained Earnings (Direct Posting) 618,009

2,087,460 2,087,460