Journal Entries

Event Date Description of Event

1

January 3

Employees are paid monthly on the first business day of the month for work done in the previous month. The total payroll for the previous month is $110,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks.

2

GBI received $55,692 in safety product inventory and $37,128 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $92,820 are net 10 days. GBI paid the CWX shipping company $550 with a manual check for the shipment of the goods. The bill of lading showed that the safety product inventory arrived in 6 boxes with a total weight of 120 lbs and the raw materials came on a pallet and weighed 100 lbs.

3

Windy City Bikes in Chicago, IL ordered $22,000 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,180. The goods were shipped to Windy City immediately via UPS using Windy Citys UPS shipping number. The terms of payment for Windy Citys order are 2/10 net 30 days.

4

January 7

GBI received payment of $16,850 from Northwest Bikes in Seattle, WA for the balance due on their account.

5

January 10

GBIs account on the utility company website is updated at the end of each month when the meter is read. GBI uses this data to accrue the expenses at the end of each month (in this case on December 31st.) This allows recognition of the expense in the correct period. Expenses are usually accrued at the end of the month as Accrued Expenses. GBI paid the December utility bill of $988 via the companys automatic electronic bill pay program.

6

GBIs advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of July for six months of advertising, August through January, (Five months of advertising have already been used.)

7

January 11

The office manager in San Diego ordered $350 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBIs office. GBI has an account with Staples and payment terms are net 10. Operating supplies expense is figured at the end of the month determined by the amount of supplies used during the month.

8

GBI ordered $99,418 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30.