Chapter 8 Comprehensive and General Ledger Problems Questic value 10.00 points One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31 Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Unearned Revenue (30 units) Accounts Payable Notes Payable (long-term) Common Stock Retained Earnings $18,620 9,650 900* 2,800 4,350 1,300 15,000 5,000 4,520 *credit balance The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $145 per unit. OTP's January 1 inventory balance consists of 35 units at a total cost of $2,800. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system In December, OTP received a $4,350 payment for 30 units to be delivered in January; this obligation was recorded in Unearned Revenue. Rent of $1,300 was unpaid and recorded in Accounts Payable at December 31 OTP's note payable matures in three years, and accrues interest at a 10% annual rate . January Transactions Included in OTP's January 1 Accounts Receivable balance is a $1,500 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,500 balance at this time. On 01 /01, OTP arranges with Jeff to convert the $1,500 balance to a 6-month note, at 12% annual interest. Jeff signs the promissory payable to OTP on July 1 of this year OTP paid a $500 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense OTP purchased an additional 150 units of inventory from a supplier on account on 01/05 at a total cost of $9,000, with terms 2/15, n/30 OTP paid a courier $300 cash on 01/05 for same-day delivery of the 150 units of inventory The 30 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06 On 01/07, OTP paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in 3) Sales of 40 units of inventory occuring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are 2/10, n/30 Collected payments on 01/14 from sales to customers recorded on 01/10. The discount was properly taken by customers on $5,800 of these credit sales; consequently, OTP received less than $5,800 OTP paid the first 2 weeks wages to the employees on 01 /16. The total paid is $2,200 1. note, which indicates the principal and all interest will be due and 2. 3. 4. 5. 6. 7. 8. 9. 10. Wrote off a $1,000 customer's account balance on 01/18. OTP uses the allowance method, not the 11. Paid $2,600 on 01/19 for December and January rent. See the earlier bullets regarding the 12. OTP recovered $400 cash on 01/26 from the customer whose account had previously been written 13. An unrecorded $400 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then direct write-off method December portion. The January portion will expire soon, so it is charged directly to expense off on 01/18 14. Sales of 65 units of inventory during the period of 01/10-01/28, with terms 2/10, n/30, are recorded 15. Of the sales recorded on 1/28, 15 units are returned to OTP on 01/30. The inventory is not damaged 16. On 01/31, OTP records the $2,200 employee salary that is owed but will be paid February 1 on 01/28 and can be resold 17. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 8% is estimated to be uncollectible (Update the balances of both relevant accounts prior to determining the appropriate adjustment, and round your calculation to the nearest dollar.) 18. Accrue interest for January on the note payable on 01/31 19. Accrue interest for January on Jeff Letrotski's note on 01/31 (see 1). Statement of General ournal General Ledger Income Statement Requirement Trial Balance Retained Balance Sheet Analysis Earnings General Journal tab Prepare all January journal entries and adjusting entries for items 1-19. Review the 'General Ledger' and the adjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances Trial Balance tab - Review the adjusted 'Trial Balance' as of January 31. Income Statement tab - Prepare an income statement for the period ended January 31 in the 'Income Statement' Tab Statement of Retained earnings Prepare a statement of retained earning in the 'Statement of Retained earnings' Tab Balance Sheet tab Prepare a classified balance sheet as of January 31 in the 'Balance Sheet' Tab Analysis tab - Using the information from the requirements above, complete the 'Analysis' tab Requirement General Journal>