Intermediate accounting 3

Adjusting Entries

The financial data as of October 2020 for Whole Pine Inc. is given in the spreadsheet. You are asked to record sales, prepare annual adjusting entries, prepare a a balance sheet and income statement. Complete the following tasks.

Prepare the journal entries to record (1) the sale on October 2, 2020.

Prepare the journal entries to record (2) the granting of the allowance on October 16, 2020.

Prepare any other adjusting entries required (3) on October 31, 2020 (when Steele prepares financial statements).

Prepare the Income Statement at October 31, 2020. Use a formula whenever possible to do a calculation of a value.

Prepare the Balance Sheet at October 31, 2020. Use a formula whenever possible to do a calculation of a value.

Drop down menu:

Accounts receivable

Accounts receivable -net

Allowance for sales returns and allowances

Cash

Cost of goods sold

Estimated inventory returns

Gross profit

Inventory

Less: sales returns and allowances

Net sales

Operating income

Prepaid expense

Sales returns and allowances

Sales revenue

A B D E F G H J K L M N O P Q R 1 2 Sales With Allowances On October 2, 2020, Whole Pine, Inc. sold elite camping gear to Quiet Flag Industries. As part of the sales agreement. Whole Pine includes a provision that if Quiet Flag Industries is dissatisfied with the product, Whole Pine will grant an allowance on the sales price or agree to take the product back (although returns are rare, given the long-term relationship between Whole Pine and Quiet Flag Industries). On October 16, 2020, Whole Pine grants an allowance to Quiet Flag Industries because the color for some of the items delivered was a bit different than what appeared in the catalog. Additional information concerning the sale follows: Sales price of camping gear $ Cost of gear sold $ Expected total allowances to Quiet Flag Industries Allowance granted to Quiet Flag Industries on October 16 $ 6,000 3,600 800 400 Instructions: (a) Prepare journal entries for Whole Pine to record (1) the sale on October 2, 2020, (2) the granting of the allowance on October 16, 2020, and, (3) any adjusting required on October 31, 2020, (when Whole Pine prepares financial statements). Whole Pine now estimates additional allowances of $250 will be granted to Quiet Flag Industries in the future. Debit Credit (1) Oct. 2 Debit Credit (2) Oct. 16 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 Debit Credit (3) Oct. 31 (b) Indicate the Income Statement and Balance Sheet reporting by Whole Pine on October 31, 2020 of the information related to the Quiet Flag Industries transaction. Income Statement (partial) For the Month Ended on October 31, 2020 Balance Sheet (partial) October 31, 2020