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Make Journal Entries, T-accounts, Unadjusted Trial Balance, Adjusted trial balance, Post Closing Trial balance, Multi-Step Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement

Make Journal Entries, T-accounts, Unadjusted Trial Balance, Adjusted trial balance, Post Closing Trial balance, Multi-Step Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement of Cash Flows.

financial statements for the month ended January 31, 2015. Please use the following Chart of accounts.

CHART OF ACCOUNTS

101

Cash

230

Interest Payable

106

Accounts Receivable

301

Common Stock

110

Allowance For Doubtful Accounts

350

Retained Earnings

126

Inventory

405

Sales Revenue

128

Prepaid Insurance

406

Sales Discounts and Allowance

131

Prepaid Rent

501

Cost of Goods Sold

135

Prepaid Advertising

520

Utility Expense

163

Office Equipment

525

Wage Expense

164

Mixing Barrels

530

Interest Expense

165

Factory Equipment

535

Rent expense

190

Accumulated Depreciation

545

Insurance Expense

201

Accounts Payable

550

Bad Debt Expense

215

Notes Payable

560

Depreciation Expense

220

Line of Credit

565

Advertising Expense

225

Income Taxes Payable

570

Income Tax Expense

Company Background and Accounting Policies:

Grandpas Cough Inc. (GCI) sells a uniquely flavored cough syrup either wholesale or through its own storefront.

Cases contain 24 bottles. Each bottle costs the company $2 to make and the company sells bottles for $4.5. Each case is sold for $90 the cost to ship is paid for by the customer. Customers pay at the last minute of their terms unless otherwise noted.

Gene has a revolving line of credit with a local bank, if the cash balance drops below $15,000 then Gene will draw money against the line of credit in $5,000 increments, until the balance is above $25,000. Simple interest rate on the line is 3.4%. Interest accrues daily and paid at the end of each month.

The company maintains inventory at $72,000, and will purchase materials every time the inventory drops below that amount in $4,000 increments, vendor pays shipping. Terms are N/15. Gene pays all bills at the last minute.

Round all answers to the nearest dollar

Grandpa's Cough Inc.

Balance Sheet

As of December 31, 2015

Assets

Current Assets

Cash

$ 16,000

Accounts Receivable

10,000

Allowance for Doubtful Accounts

(1,000)

Inventory

50,000

Prepaid Insurance

700

Prepaid Rent

2,200

Total Current Assets

$ 77,900

Fixed Assets

Office Equipment

$ 3,500

Mixing Barrels

9,500

Factory Equipment

15,000

Less: Accumulated Depreciation

(19,860)

Total Fixed Assets

$ 8,140

Total Assets

$ 86,040

Liabilities and Stockholders' Equity

Current Liabilities

Accounts Payable

$ 25,000

Interest Payable

44

Current Portion of Long Term Debt

1,600

Total Current Liabilities

$ 26,644

Long Term Debt

Notes Payable

16,000

Total Long Term Debt

16,000

Total Liabilities

$ 42,644

Stockholders' Equity

Retained Earnings

$ 28,931

Common Stock

14,465

Total Stockholders' Equity

43,396

Total Liabilities and Stockholders' Equity

$ 86,040

Date

Transaction

January 1, 2015

Gene Autry became a new owner by investing $25,000 Cash and office equipment worth $6,000 in return for common stock of Grandpas Cough Inc.

1

Purchased Mixing Barrels worth $3,000 and Other Factory Equipment worth $600 on credit, N/30

1

Purchased Inventory on credit for $72,000 with terms N/15

1

Paid Vendor $15,000 for prior month purchases

2

Paid $4,500 for annual premium on insurance coverage starts at the end of the month.

3

During the grand opening of the store GCI sold 256 Bottles of Cough Syrup.

4

A wholesale customer ordered 100 cases, GCI shipped the order and billed the customer 2/5 N/10

5

Received payment from customer from prior month sale $5,000.

6

Sold 300 Bottles of Cough Syrup through the store.

7

Received half the payment for sale of goods on January 4

10

Paid $4,200 for three months rent for store front starting on January 1, 2015.

13

Sold 400 Bottles of Cough Syrup through the store

15

Shipped order for another wholesale customer 500 cases N/10

15

Received and paid Utility Bill for $500

18

Shipped order of 300 Cases to a wholesale customer N/10

20

Sold 625 Bottles of Cough Syrup through the store

25

Shipped order to wholesale customer 1,000 cases 2/10 N/30

26

Paid for mixing barrels and equipment purchased on January 1

27

Sold 1,000 bottles of Cough Syrup through the store

30

Paid wages under the table to employees of $15,000

31

Paid $2,000 for 12 month advertising campaign through local radio stations. The campaign starts February 1st.

Additional Project information:

Ensure you are using the December 31 balance sheet for the beginning balances of your accounts.

When you are setting up your accounts use the chart of accounts included on the front page (you will not need to create any new account or account number).

Please follow the journal entry format from the first two weeks of class.

There is only one general journal where all transactions are recorded.

Pay close attention to the transactions as they are listed on page three, these are not all transactions that you will need to journalize. The accounting policies on page 1 will require you to post additional entries (it helps to keep a tickler file).

Adjusting Journal Entry Information:

The beginning balance in Prepaid Rent was for the factory as of December 31, 2015 the balance had two months remaining.

Prior Period Prepaid Insurance was for an annual policy that expires at the end of January.

The Note was borrowed on December 31, 2015 and holds interest of 3%. Interest is accrued and not paid at the end of the month. The first principle payment is due in the month of June.

GCI wrote off $5,000 of bad debt at the end of the month, and used the aging of receivables method to estimate the allowance for doubtful accounts to be $10,000

All depreciation is straight-line with no residual value.

Office equipment is expected to last 5 years

Factory Equipment is expected to last 4 years

Mixing barrels are expected to last 10 years.

Assume the income tax rate for GCI is 15%.

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