Question
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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