Final Project A The Fashion Rack The Fashion Rack is a retail merchandising business that sells brand-name clothing at discount prices. The firm is owned and managed by Teresa Lojay, who started the business on April 1, 2020. This project will give you an opportunty to put your knowledge of accounting into practice as you handle the accounting work of The Fashion Rack during the month of October 2020. INTRODUCTION The Fashion Rack has a monthly accounting period. The firm's chart of accounts is shown below. The journals used to record transactions is the general journal. The employees are paid at the end of the month. A computerized payroll service prepares all payroll records and checks. INSTRUCTIONS 1. Analyze the transactions for October and record each transaction in the General journal. (Use 16 as the number for the first page of the general journal.) 2. Post the transactions to the general ledger accounts. 3. Check the accuracy of the subsidiary ledgers by preparing a schedule of accounts receivable and a schedule of accounts payable as of October 31, 2020. Compare the totals with the balances of the Accounts Receivable account and the Accounts Payable account in the general ledger. 4. Check the accuracy of the general ledger by preparing a trial balance in the first two columns of a 10column worksheet. Make sure that the total debits and the total credits are equal. 5. Complete the Adjustments section of the worksheet. Use the following data. Identify each adjustment with the appropriate letter. Round to the nearest whole dollar. a. During October, the firm only had net credit sales. From experience with similar businesses, the previous accountant had estimated that 1.0 percent of the firm's net credit sales would result in uncollectible accounts. Record an adjustment for the expected loss from uncollectible accounts for the month of October. b. On October 31, an inventory of the supplies showed that items costing $3,240 were on hand. Record an adjustment for the supplies used in October. c. On September 30, 2020, the firm purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October. d. On October 1, the firm signed a three-month advertising contract with a local cable television station and paid the full amount in advance. Record an adjustment for the expired advertising for October. e. On April 1, 2020, the firm purchased equipment for $83,000. The equipment was estimated to have a useful life of five years and a salvage value of $12,500. Record an adjustment for depreciation on the equipment for October. f. g Based on a physical count, ending merchandise inventory was determined to be $81,260. 6. Complete the Adjusted Trial Balance section of the worksheet. 7. Determine the net income or net loss for October and complete the worksheet. 8. Prepare a classified income statement for the month ended October 31, 2020. (The firm does not divide its operating expenses into selling and administrative expenses.) 9. Prepare a statement of owner's equity for the month ended October 31, 2020. 10. Prepare a classified balance sheet as of October 31, 2020. 11. Journalize and post the adjusting entries using general journal page 20. 12. Prepare and post the closing entries using general journal page 21. 13. Prepare a post-closing trial balance. Final Project A The Fashion Rack The Fashion Rack is a retail merchandising business that sells brand-name clothing at discount prices. The firm is owned and managed by Teresa Lojay, who started the business on April 1, 2020. This project will give you an opportunty to put your knowledge of accounting into practice as you handle the accounting work of The Fashion Rack during the month of October 2020. INTRODUCTION The Fashion Rack has a monthly accounting period. The firm's chart of accounts is shown below. The journals used to record transactions is the general journal. The employees are paid at the end of the month. A computerized payroll service prepares all payroll records and checks. INSTRUCTIONS 1. Analyze the transactions for October and record each transaction in the General journal. (Use 16 as the number for the first page of the general journal.) 2. Post the transactions to the general ledger accounts. 3. Check the accuracy of the subsidiary ledgers by preparing a schedule of accounts receivable and a schedule of accounts payable as of October 31, 2020. Compare the totals with the balances of the Accounts Receivable account and the Accounts Payable account in the general ledger. 4. Check the accuracy of the general ledger by preparing a trial balance in the first two columns of a 10column worksheet. Make sure that the total debits and the total credits are equal. 5. Complete the Adjustments section of the worksheet. Use the following data. Identify each adjustment with the appropriate letter. Round to the nearest whole dollar. a. During October, the firm only had net credit sales. From experience with similar businesses, the previous accountant had estimated that 1.0 percent of the firm's net credit sales would result in uncollectible accounts. Record an adjustment for the expected loss from uncollectible accounts for the month of October. b. On October 31, an inventory of the supplies showed that items costing $3,240 were on hand. Record an adjustment for the supplies used in October. c. On September 30, 2020, the firm purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October. d. On October 1, the firm signed a three-month advertising contract with a local cable television station and paid the full amount in advance. Record an adjustment for the expired advertising for October. e. On April 1, 2020, the firm purchased equipment for $83,000. The equipment was estimated to have a useful life of five years and a salvage value of $12,500. Record an adjustment for depreciation on the equipment for October. f. g Based on a physical count, ending merchandise inventory was determined to be $81,260. 6. Complete the Adjusted Trial Balance section of the worksheet. 7. Determine the net income or net loss for October and complete the worksheet. 8. Prepare a classified income statement for the month ended October 31, 2020. (The firm does not divide its operating expenses into selling and administrative expenses.) 9. Prepare a statement of owner's equity for the month ended October 31, 2020. 10. Prepare a classified balance sheet as of October 31, 2020. 11. Journalize and post the adjusting entries using general journal page 20. 12. Prepare and post the closing entries using general journal page 21. 13. Prepare a post-closing trial balance