Below are the financial statements of Zipparoo, Inc. Zipparoo sells rubber work boots called Zips Below are the financial statements for the previous month. Income Statement (previous month) Sales Revenue 60,000 Cost of Goods Sold 12,000 Gross Profit 48,000 Salaries Expense 9,000 Bad Debt Expense 6,000 Rent Expense 7,000 Office Supplies Expense 3,000 Depreciation Expense 8,000 33,000 Operating Income 15,000 Gain on Sale of Equipment 3,000 Interest Expense (5,000) (2,000) Net Income 13,000 Statement of Retained Earnings (previous month) Beginning Retained Earnings 40,000 Net Income 13,000 Dividends (3,000) Ending Retained Earnings 50,000 Balance Sheet (previous month) Assets Liabilities Cash 54,000 Accounts Payable 9,000 Accounts Receivable 30,000 Salaries Payable 2,000 Allow For Doubtful Accts (3,000) Unearned Revenues 20,000 Office Supplies 7,000 Long-term Debt 27,000 Inventory 18,000 Total Liabilities 58,000 Prepaid Rent 48,000 Equipment 100,000 Equities Accumulated Depreciation (35,000) Common Stock 111,000 Retained Earnings 50,000 Total Equities 161,000 Total Assets 219,000 Total Liab and Equities 219,000 Additional information at the BEGINNING of the month: 1. Inventory consists of 1,000 pairs of Zips, each costing $18. Zipparoo uses the LIFO inventory method. Round all inventory calculations to the nearest dollar. 2. The net method is used for recording purchases. 3. The Equipment of $100,000 was originally purchased 10 years ago. At that time, it was estimated that the equipment would have a useful life of 20 years and a salvage value of $30,000. Zipparoo uses the straight-line depreciation method. 4. Zipparoo uses the Balance Sheet method of accounting for bad debts. 5. Round all calculations to the nearest dollar. Transactions during the month: Jan. 1 Paid $1,800 for a one year premium on property and casualty insurance. The policy covers the period January 1, 2011 to December 31, 2011. Jan. 1 Sold 610 pairs of Zips to Joey on account for $61 each, terms 2/10, net 30. Jan. 2 Zipparoo purchased additional equipment for cash for $25,000. The equipment has an expected life of 10 years and an estimated salvage value of $4,500. Jan. 5 Joey returned 71 pairs of Zips because of defections. The inventory could not be resold and was disposed of. Jan. 8 Purchased 710 pairs of Zips from Bluey on account for $21 each, terms 3/10, net 60. Jan. 9 Office supplies totaling $7,500 were purchased on account. Jan. 10 Joey paid full amount owed. Round calculations to the nearest dollar. Jan. 12 Sold 710 pairs of Zips to Pete on account for $71 each, terms 2/10, net 30. Jan. 14 Purchased 450 pairs of Zips from Kanga on account for $15 each, terms 2/10, net 30. Jan. 17 Paid full amount owed to Bluey from Jan. 8 purchase. Jan. 18 Paid $11,000 for workers salaries. This amount includes amounts owed from the previous month. Jan. 23 Delivered 350 pairs of Zips to Flash who had purchased them in advance last month, $15,000. Jan. 24 Paid interest on Long-Term Debt, $5,500. Jan. 25 Paid dividends to stockholders, $3,500. Jan. 26 Received cash from customers billed in the previous month, $11,000. Jan. 27 Pete paid full amount owed. Jan. 27 Paid full amount owed to Kanga from Jan. 14 purchase. Jan. 28 One of Zipparoos customers, Rooth, owes $2,500 but has informed Zipparoo that he will not pay because of bankruptcy. Zipparoo writes off Rooths account as uncollectible. Jan. 30 Paid utilities for January of $475. Zipparoo Chart of Accounts 11 Cash 12 Accounts Receivable 13 Allowance for Doubtful Accounts 14 Office Supplies 15 Prepaid Rent 16 Inventory 17 Prepaid Insurance 18 Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Revenues 25 Long-term Debt 31 Common Stock 34 Retained Earnings 35 Dividends 37 Income Summary 41 Sales Revenue 42 Sales Returns and Allowances 43 Sales Discounts 51 Insurance Expense 52 Uncollectible Account Expense 53 Rent Expense 54 Cost of Goods Sold 55 Office Supplies Expense 56 Interest Expense 57 Depreciation Expense 58 Utilities Expense 59 Salaries Expense 60 Purchase Discount Lost/Taken 2. Journalize each of the above transactions. EXPLANATIONS ARE NOT REQUIRED. 3. Post the entries to the ledger. 4. Prepare a trial balance as of January 31, 20X1.