Question
Marco Polo sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to
Marco Polo sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to be their accounting manager. They use the perpetual inventory system and use the weighted average method to determine value for the inventory. |
The opening balances for the month of September are as follows:
Marco Polo | |||
Balance Sheet | |||
As at September 30, 2020 | |||
Assets |
| Liabilities |
|
Cash | $26,800 | Accounts Payable | $18,700 |
Accounts Receivable | 18,000 | Bank Loan | 25,000 |
Merchandise Inventory | 12,750 | Total Liabilities | $43,700 |
Equipment | 120,000 | Shareholders' Equity |
|
Accumulated Depreciation | -40,000 | Common Shares | 62,000 |
|
| Retained Earnings | 31,850 |
Total Assets | $137,550 | Total Liabilities & Shareholders' Equity | $137,550 |
The inventory figure includes 500 units purchased at $25.5 each.
Transactions for the month of October:
Oct 1 | Bought inventory from Outdoor Muzi on account, invoice #5455; 1000 units at $30 each. Terms of the purchase were 4/10, net 30. Update the inventory table after each purchase. |
Oct 2 | Sold goods to Outback Kian, 700 units at $100 each with invoice #4741. The invoice terms were 5/10, net 30. Update the inventory table after each sale. |
Oct 5 | Paid $1,200 with cheque #143 to Outdoor Muzi for an amount owing from last month. |
Oct 5 | Bought inventory from Climb Foe with cheque #144, 600 units at $25 per unit. |
Oct 7 | Returned 200 defective units to Climb Foe and received cash. |
Oct 8 | Received $900 from Firewood Bill for a sale on account last month. |
Oct 10 | Outback Kian paid invoice #4741 on time and took advantage of the early payment discount. |
Oct 31 | Prepared the payroll for October. Gross pay is $8,400, CPP is $416, EI is $158 and income tax is $1,680. The employer matches CPP contributions and pays 1.4 times the EI deduction. Use the general journal to record this. The cheque will be prepared later. |
Your staff accountant goes through the mail and opens the bank statement for the month of October provided by Fanshawe Local Bank. It is shown below.
Fanshawe Local Bank | ||||
Prepared for Marco Polo | ||||
Date | Information | Withdrawal | Deposit | Balance |
| Opening Balance |
| 12,600.00 | |
Oct 2 | Deposit |
| 14,200.00 | 26,800.00 |
Oct 5 | Chq#143 | 1,200.00 |
| 25,600.00 |
Oct 8 | Deposit |
| 66,500.00 | 92,100.00 |
Oct 8 | Deposit |
| 5,000.00 | 97,100.00 |
Oct 11 | Chq#8240 | 2,400.00 |
| 94,700.00 |
Oct 31 | Service Char | 60.00 |
| 94,640.00 |
Prepare Financial statements for year ended October 31,2020
.
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