Case: Northern Reflections Northern Reflections sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to be their accounting manager. They use the perpetual inventory system and use the weigted average method to determine value for the inventory. The opening balances for the month of September are as follows: Northern Reflections Balance Sheet As at September 30, 2020 Assets Current Assets $27,200 16,000 13,000 56,200 Cash Accounts Receivable Merchandise Inventory Total Current Assets Proptery, Plant & Equipment Equipment Accumulated Depreciation Total Assets 130,000 -35,000 95,000 $ 151,200 $16,200 6,000 $22,200 Liabilities Current Liabilities Accounts Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 18,000 $40,200 50,000 61,000 111,000 $ 151,200 The bank loan has an annual interest rate of 5% and has monthly principal payment of $500. The inventory figure includes 500 units purchased at $26.00 each. Account # 400 405 410 420 500 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 El 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 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 510 515 520 525 530 535 540 545 550 555 Page 1 Transactions for the month of October: Oct 1 Oct 2 Oct 5 Bought inventory from Outdoor Muzi on account, invoice #5455; 900 units at $28 each. Terms of the purchase were 4/10, net 30. Update the inventory table after each purchase. Sold goods to Outback Kian, 600 units at $80 each with invoice #4741. The invoice terms were 5/10, net 30. Update the inventory table after each sale. Paid $1,100 with cheque #143 to Outdoor Muzi for an amount owing from last month. Bought inventory from Climb Foe with cheque #144, 650 units at $29 per unit. Returned 150 defective units to Climb Foe and received cash. Received $800 from Firewood Bill for a sale on account last month. Outback Kian paid invoice #4741 on time and took advantage of the early payment discount. Oct 5 Oct 7 Oct 8 Oct 10 Oct 31 Prepared the payroll for October. Gross pay is $8,000, CPP is $408, El is $150 and income tax is $1,600. 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. Made monthly bank loan payment of $600 which includes $500 principal and $100 interest. Oct 31 Required: i) Record the transactions above in the general journal and then post amounts to the General Ledger. Note: Also remember to enter your posting references. General Journal Account Title and Explanation Page 3 CR Date PR DR General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance (DR or CR) 27,200.00 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) 16,000.00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (DR or CR) 13,000.00 DR Account: Date Prepaid Insurance Description Opening Balance PR DR CR GL No: 125 Balance (DR or CR) 0.00 DR Account: Date Equipment Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 130,000.00 DR Account: Date Accumulated Depreciation Description PR Opening Balance DR CR GL No: 145 Balance (DR or CR) 35,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 16,200.00 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: 225 Account: Date El Payable Description Opening Balance PR DR CR Balance (DR or 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: Date Salaries Payable Description Opening Balance PR DR CR GL No: 235 Balance (DR or CR) 0.00 CR Account: Date R Unearned Revenue Description Opening Balance PR DR CR GL No: 240 Balance (DR or CR) 0.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 24,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 50,000.00 CR Account: Date Retained Earnings Description Opening Balance PR DR CR GL No: 305 Balance (DR or CR) 61,000.00 CR Account: Date Sales Revenue Description GL No: 400 Balance (DR or CR) PR DR CR Account: Date Sales Discounts Description GL No: 405 Balance (DR or CR) PR DR CR Account: Date Sales Returns and Allowances Description PR GL No: 410 Balance (DR or CR) DR CR Account: Interest Revenue Description GL No: 420 Balance (DR or CR) Date PR DR CR Account: Date Cost of Goods Sold Description GL No: 500 Balance (DR or CR) PR DR CR Account: Date Employee Benefits Expense Description PR GL No: 510 Balance (DR or CR) DR CR Account: Depreciation Expense Description GL No: 515 Balance (DR or CR) Date PR DR CR Account: Insurance Expense Description GL No: 520 Balance (DR or CR) Date PR DR CR Account: Interest Expense Description GL No: 525 Balance (DR or CR) Date PR DR CR Account: Office Supplies Expense Description PR GL No: 530 Balance (DR or CR) Date DR CR Account: Rent Expense Description GL No: 535 Balance (DR or CR) Date PR DR CR Account: Salaries Expense Description Date PR GL No: 540 Balance (DR or CR) DR CR Account: Bank Charges Expense Description GL No: 545 Balance (DR or CR) Date PR DR CR Account: Entertainment Expense Description PR GL No: 555 Balance (DR or CR) Date DR CR Case: Northern Reflections Northern Reflections sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to be their accounting manager. They use the perpetual inventory system and use the weigted average method to determine value for the inventory. The opening balances for the month of September are as follows: Northern Reflections Balance Sheet As at September 30, 2020 Assets Current Assets $27,200 16,000 13,000 56,200 Cash Accounts Receivable Merchandise Inventory Total Current Assets Proptery, Plant & Equipment Equipment Accumulated Depreciation Total Assets 130,000 -35,000 95,000 $ 151,200 $16,200 6,000 $22,200 Liabilities Current Liabilities Accounts Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 18,000 $40,200 50,000 61,000 111,000 $ 151,200 The bank loan has an annual interest rate of 5% and has monthly principal payment of $500. The inventory figure includes 500 units purchased at $26.00 each. Account # 400 405 410 420 500 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 El 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 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 510 515 520 525 530 535 540 545 550 555 Page 1 Transactions for the month of October: Oct 1 Oct 2 Oct 5 Bought inventory from Outdoor Muzi on account, invoice #5455; 900 units at $28 each. Terms of the purchase were 4/10, net 30. Update the inventory table after each purchase. Sold goods to Outback Kian, 600 units at $80 each with invoice #4741. The invoice terms were 5/10, net 30. Update the inventory table after each sale. Paid $1,100 with cheque #143 to Outdoor Muzi for an amount owing from last month. Bought inventory from Climb Foe with cheque #144, 650 units at $29 per unit. Returned 150 defective units to Climb Foe and received cash. Received $800 from Firewood Bill for a sale on account last month. Outback Kian paid invoice #4741 on time and took advantage of the early payment discount. Oct 5 Oct 7 Oct 8 Oct 10 Oct 31 Prepared the payroll for October. Gross pay is $8,000, CPP is $408, El is $150 and income tax is $1,600. 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. Made monthly bank loan payment of $600 which includes $500 principal and $100 interest. Oct 31 Required: i) Record the transactions above in the general journal and then post amounts to the General Ledger. Note: Also remember to enter your posting references. General Journal Account Title and Explanation Page 3 CR Date PR DR General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance (DR or CR) 27,200.00 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) 16,000.00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (DR or CR) 13,000.00 DR Account: Date Prepaid Insurance Description Opening Balance PR DR CR GL No: 125 Balance (DR or CR) 0.00 DR Account: Date Equipment Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 130,000.00 DR Account: Date Accumulated Depreciation Description PR Opening Balance DR CR GL No: 145 Balance (DR or CR) 35,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 16,200.00 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: 225 Account: Date El Payable Description Opening Balance PR DR CR Balance (DR or 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: Date Salaries Payable Description Opening Balance PR DR CR GL No: 235 Balance (DR or CR) 0.00 CR Account: Date R Unearned Revenue Description Opening Balance PR DR CR GL No: 240 Balance (DR or CR) 0.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 24,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 50,000.00 CR Account: Date Retained Earnings Description Opening Balance PR DR CR GL No: 305 Balance (DR or CR) 61,000.00 CR Account: Date Sales Revenue Description GL No: 400 Balance (DR or CR) PR DR CR Account: Date Sales Discounts Description GL No: 405 Balance (DR or CR) PR DR CR Account: Date Sales Returns and Allowances Description PR GL No: 410 Balance (DR or CR) DR CR Account: Interest Revenue Description GL No: 420 Balance (DR or CR) Date PR DR CR Account: Date Cost of Goods Sold Description GL No: 500 Balance (DR or CR) PR DR CR Account: Date Employee Benefits Expense Description PR GL No: 510 Balance (DR or CR) DR CR Account: Depreciation Expense Description GL No: 515 Balance (DR or CR) Date PR DR CR Account: Insurance Expense Description GL No: 520 Balance (DR or CR) Date PR DR CR Account: Interest Expense Description GL No: 525 Balance (DR or CR) Date PR DR CR Account: Office Supplies Expense Description PR GL No: 530 Balance (DR or CR) Date DR CR Account: Rent Expense Description GL No: 535 Balance (DR or CR) Date PR DR CR Account: Salaries Expense Description Date PR GL No: 540 Balance (DR or CR) DR CR Account: Bank Charges Expense Description GL No: 545 Balance (DR or CR) Date PR DR CR Account: Entertainment Expense Description PR GL No: 555 Balance (DR or CR) Date DR CR