Question
Beca Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the
Beca Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the request of the creditor holding the note payable. The companys post-closing trial balance at December 31, 2020, the end of its fiscal year, is presented below:
BECA Convenience Store LTD. Post-Closing Trial Balance December 31, 2020 | ||||
Debit | Credit | |||
Cash | $5,950 | |||
Accounts receivable | 142,800 | |||
Allowance for doubtful accounts | $9,520 | |||
Inventory | 71,400 | |||
Estimated inventory returns | 1,190 | |||
Prepaid insurance | 14,280 | |||
Equipment | 214,200 | |||
Accumulated depreciation | 95,200 | |||
Accounts payable | 80,920 | |||
Employee income tax payable | 8,092 | |||
CPP payable | 3,808 | |||
EI payable | 1,428 | |||
Refund liability | 3,570 | |||
Dividends payable | 5,950 | |||
Notes payable (due 2023) | 142,800 | |||
Common shares | 59,500 | |||
Retained earnings | 39,032 | |||
$449,820 | $449,820 |
The company had the following transactions during January 2021. When recording these transactions, use the item number listed instead of the date. The company records adjusting entries on a monthly basis.
1. | Paid off accounts payable of $65,450. | |
2. | Purchased inventory costing $32,130 on credit. | |
3. | Sold inventory that cost $35,700 on credit for $121,380. However, $2,380 of the amount sold is expected to be refunded due to returns and the cost of the inventory expected to be returned is $952. | |
4. | Collected accounts receivable amounting to $129,710. | |
5. | Wrote off $5,950 of uncollectible accounts receivable. | |
6. | Received inventory returns from customers and reduced accounts receivable from these customers for $3,332. The inventory that these customers returned was in excellent condition and had a cost of $1,071. | |
7. | Paid all salary-related liabilities outstanding at the beginning of January. | |
8. | Paid salaries to employees, who earned a total of $47,600 of gross pay less employee income tax, CPP, and EI of $8,568, $2,428, and $771, respectively. Withholdings will be remitted in February. | |
9. | Recorded employee benefits expense relating to the employers share of CPP of $2,428 and EI of $1,079. | |
10. | Paid rent of $10,710. | |
11. | Paid dividends owing on payment date at the beginning of the month. | |
12. | Expired $1,190 of prepaid insurance. | |
13. | Paid monthly interest on the 4%, $142,800 note payable. | |
14. | Sold equipment at the end of January for $16,660 cash. The equipment had a cost of $23,800 and a carrying amount of $14,280. | |
15. | Purchased new equipment at the end of the month costing $11,900 by issuing common shares. | |
16. | Incurred depreciation on equipment on a straight-line basis. The equipment has a useful life of six years and no residual value. | |
17. | Estimated at the end of January that $4,998 of accounts receivable was uncollectible. | |
18. | Estimated that income tax incurred in January amounted to $4,760. This amount will be paid next month. |
Record the Journal entries for the events listed above.
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