Jessie Samuels, a sole trader, owns a retail shop in Brownie Town that sells a designer shoe items. She named it Jess Come Buy. The following information relates to the transactions of Jess Come Buy for the first month of operation May 2021.

May 1 started business with, cash, $50,000, motor vehicle $120,000 and building, $250,000 May 2 received a long term loan from the First Union Bank, $260,000 by cheque

May 3 paid for store furniture by cheque $50,000.

May 3 bought merchandise for resale by cheque $130,000.

May 4 sold merchandise to Dillards Department Store, for cash $110,000.

May 5 sold merchandise on credit to New York & Co $105,000 and Nordstrom $95,000.

May 6 rented Tory Burch a booth for the month of May to display their new summer arrivals, $15,000. The contract states that they will pay this amount by cash on June 5, 2021.

May 7 bought merchandise on credit from Jimmy Choo $80,000.

May 8 sold merchandise on credit to Neiman Marcus $65,000.

May 10 bought fancy stationery with the entitys logo for cash $21,000.

May 11 Being a new kid on the block, aggressive marketing and advertising was needed. Jess hired Willz Marketing Associates to advertise the business is various magazines. She paid them $60,000 cash.

May 13 May 14

May 15 May 16 May 17 May 18 May 19

May 20

May 22

returned merchandise to Jimmy Choo for $6,000 receiving a credit note for these goods. purchased a Display Cabinet, (place in furniture account) on credit from Courts Ltd for $150,000.

bought merchandise on credit from Manolo Blahnik $35,200.

sold merchandise receiving a cheque for $135,000

New York & Co settled their account with cash receiving a 5% discount.

lodged cash of $45,000 to the business bank account.

merchandise valued at $5,500, sold on credit to Nordstrom on May 5, was returned a

credit note was given to Nordstrom

paid Jimmy Choo $65,000 in full settlement of the balance outstanding by cheque. The

outstanding amount after payment was received as a discount. (Tip: rough check the

balance re the debits and credit for Jimmy)

paid electricity by cheque $60,000, water rates by cash, $25,000 and security fees of

$25,000 by cheque

paid staff salaries by cheque $85,000.

Jessica, took some merchandise, a pair of crystal studded sandals to wear to her

May 25

May 28

husbands birthday party $15,000

May 30 received commission by cheque for selling a Limited-Edition Jimmy Choo, patent leather pumps of $20,000

2

REQUIRED:

Journalize the following adjusting entries using the following information:

The total monthly water rate is $30,000.

One employees salary was overpaid by $4,500. Investigations proved that a

miscalculation occurred and the employee was indeed over paid for the month.

The insurance for the shop was due and payable by May 1st. The annual premium

is $48,000 and the expense is incurred monthly. This was not previously included

in the transactions listed

It was found that of Neiman Marcus balance, $4,000 must be written off as bad

debts.

Three thousand dollars ($3,000) of the Commission received was for the month of

June 2021

For the first month of operation, depreciation annually is calculated at:

o Building 9% Straight Line

o Motor Vehicle - 15% Straight Line o Furniture 12% Straight line

Note: when doing the adjusted T accounts only the accounts that have been affected need to be done (5 marks)

Post the above adjusting entries to their respective accounts in the general ledger creating additional accounts as the journals would dictate. (Please refer to notes re the journals) (5 marks)

Prepare an adjusted trial balance with the inclusion of the above balances (5 marks)

Prepare the Statement of Profit or Loss and the Statement of Financial Position for the period under review. For use in the financial statements, closing stock amounts to $25,000 at the end of the month.