Case: DITO Shoppee - Solutions DITO Shoppee owned by Graham Smith, is an freestyle clothing retailer. You were hired to account the transactions and report the status of the business. They use the perpetual inventory system and use the weigted average method to determine value for the inventory. Its balance sheet as at January 31, 2021, is presented below. DITO Shoppee Classified Balance Sheet As at January 31, 2021 Assets Cash $32,400 Accounts Receivable 16,820 Merchandise Inventory 37,200 Prepaid Insurance 3,200 Total Current Assets Long-Term Assets Equipment 145,000 Accumulated Depreciation -40,000 Total Assets 89,620 105,000 $194,620 Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities $13,100 $9,200 $3,400 10,560 $36,260 19,440 $55,700 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 72,000 66,920 138,920 $194,620 The bank loan has an annual interest rate of 8% and has monthly principal payment of $880. The inventory figure includes 1,200 units purchased at $31.00 each. Account # 400 405 410 420 430 500 510 The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash 101 Petty Cash 105 Accounts Receivable 110 Merchandise Inventory 120 Prepaid Insurance 125 Equipment 140 Accumulated Depreciation 145 LIABILITIES Accounts Payable 200 Interest Payable 205 CPP Payable 220 EI Payable 225 Income Tax Payable 230 Salaries Payable 235 Unearned Revenue 240 Bank Loan 245 SHAREHOLDERS' EQUITY Common Shares 300 Retained Earnings 305 Account Description REVENUE Sales Revenue Sales Discounts Sales Returns and Allowances Interest Revenue Other Income EXPENSES Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense Interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of February: Feb 1 Feb 1 Feb 5 Paid rent for February amounting to $520, Cheque #2314 DITO Shoppee decided to establish a petty cash fund for the office. A cheque #2315 of $500 was issued and cashed. Purchased merchandise from Canadian Polo Inc. on account, invoice #425; 800 units at $25 each. Terms of the purchase were 4/10, net 30, FOB Destination. The seller paid the shipping cost amounting to $55. Update the inventory table after each purchase. Sold mechandise to Lee, 750 units at $95 each with invoice #1120. The invoice terms were 3/10, net 30, FOB Destination. DITO Shoppee paid the $40 to ship the goods to Lee. They used petty cash fund to pay. Update the inventory table after each sale. Some of goods purchased from Canadian Polo Inc. was defective. Canadian Polo Inc. agreed to a 30% allowance on the total purchased. Paid total liability with a cheque #2316 to Canadian Polo Inc. for the February 6 purchased. Feb 7 Feb 9 Feb 12 Feb 17 Feb 18 Feb 20 Feb 20 Lee paid invoice #1120 on time and took advantage of the early payment discount. Bought inventory from Coleman with cheque #2317, 900 units at $28 per unit. Sold 200 units at $90 each with invoice #1121 to Guess. The invoice term 3/10, net 30, FOB shipping point Received $1,000 from Prinsted Shirt Inc for a sale on account last month. The remaining balance of the petty cash account was $245. Total expenses incurred using the petty cash fund this month amounting to $250. In this amount, it includes the shipping cost incurred on Feb 7 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq#2318 Prepared the payroll for February to be paid on March 5. Gross pay is $12,300, CPP is $627, El is $231 and income tax is $2,460. The employer matches CPP contributions and pays 1.4 times the El deduction. Use the general journal to record this. The cheque will be prepared later. Feb 25 Feb 28 Feb 28 Made monthly bank loan payment of $1,080 which includes $880 principal and $200 interest. Record the transactions above in the general journal. General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance (DR or CR) 32,400.00 DR Account: Date Petty Cash Description Opening Balance PR DR CR GL No: 105 Balance (DR or CR) 0.00 DR Account: Date Accounts Receivable Description Opening Balance PR DR CR GL No: 110 Balance (DR or CR) 16,820.00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (DR or CR) 37,200.00 DR Account: Date Prepaid Insurance Description Opening Balance PR DR CR GL No: 125 Balance (DR or CR) 3,200.00 DR Account: Date Equipment Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 145,000.00 DR Account: Date Accumulated Depreciation Description PR Opening Balance DR CR GL NO: 145 Balance (DR or CR) 40,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 13,100.00 CR Account: Date Interest Payable Description Opening Balance PR DR CR GL No: 205 Balance (DR or CR) 0.00 CR Account: Date CPP Payable Description Opening Balance PR DR CR GL No: 220 Balance (DR or CR) 0.00 CR GL No: Account: Date EI Payable Description Opening Balance 225 Balance (DR or CR) PR DR CR 0.00 CR Account: Date Income Tax Payable Description Opening Balance PR DR CR GL No: 230 Balance (DR or CR) 0.00 CR Account: Salaries Payable GL No: 235