Question
Marshall Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the
Marshall Convenience Store Ltd. is a small retailer operated by a number of shareholders from a First Nations community. It reports under IFRS at the request of the creditor holding the note payable. The companys post-closing trial balance at December 31, 2020, the end of its fiscal year, is presented below:
MARSHALL Convenience Store LTD. Post-Closing Trial Balance December 31, 2020 | ||||
Debit | Credit | |||
Cash | $5,100 | |||
Accounts receivable | 122,400 | |||
Allowance for doubtful accounts | $8,160 | |||
Inventory | 61,200 | |||
Estimated inventory returns | 1,020 | |||
Prepaid insurance | 12,240 | |||
Equipment | 183,600 | |||
Accumulated depreciation | 81,600 | |||
Accounts payable | 69,360 | |||
Employee income tax payable | 6,936 | |||
CPP payable | 3,264 | |||
EI payable | 1,224 | |||
Refund liability | 3,060 | |||
Dividends payable | 5,100 | |||
Notes payable (due 2023) | 122,400 | |||
Common shares | 51,000 | |||
Retained earnings | 33,456 | |||
$385,560 | $385,560 |
The company had the following transactions during January 2021. When recording these transactions, use the item number listed instead of the date. The company records adjusting entries on a monthly basis.
1. | Paid off accounts payable of $56,100. | |
2. | Purchased inventory costing $27,540 on credit. | |
3. | Sold inventory that cost $30,600 on credit for $104,040. However, $2,040 of the amount sold is expected to be refunded due to returns and the cost of the inventory expected to be returned is $816. | |
4. | Collected accounts receivable amounting to $111,180. | |
5. | Wrote off $5,100 of uncollectible accounts receivable. | |
6. | Received inventory returns from customers and reduced accounts receivable from these customers for $2,856. The inventory that these customers returned was in excellent condition and had a cost of $918. | |
7. | Paid all salary-related liabilities outstanding at the beginning of January. | |
8. | Paid salaries to employees, who earned a total of $40,800 of gross pay less employee income tax, CPP, and EI of $7,344, $2,081, and $661, respectively. Withholdings will be remitted in February. | |
9. | Recorded employee benefits expense relating to the employers share of CPP of $2,081 and EI of $925. | |
10. | Paid rent of $9,180. | |
11. | Paid dividends owing on payment date at the beginning of the month. | |
12. | Expired $1,020 of prepaid insurance. | |
13. | Paid monthly interest on the 4%, $122,400 note payable. | |
14. | Sold equipment at the end of January for $14,280 cash. The equipment had a cost of $20,400 and a carrying amount of $12,240. | |
15. | Purchased new equipment at the end of the month costing $10,200 by issuing common shares. | |
16. | Incurred depreciation on equipment on a straight-line basis. The equipment has a useful life of six years and no residual value. | |
17. | Estimated at the end of January that $4,284 of accounts receivable was uncollectible. | |
18. | Estimated that income tax incurred in January amounted to $4,080. This amount will be paid next month. |
Prepare T accounts and enter the December 31 balances.
Cash | |||||
Accounts Receivable | |||||
Allowance for Doubtful Accounts | |||||
Inventory | |||||
Estimated Inventory Returns | |||||
Prepaid Insurance | |||||
Equipment | |||||
Accumulated DepreciationEquipment | |||||
Accounts Payable | |||||
Income Tax Payable | |||||
Employee Income Tax Payable | |||||
CPP Payable | |||||
EI Payable | |||||
Refund Liability | |||||
Dividends Payable | |||||
Notes Payable | |||||
Common Shares | |||||
Retained Earnings | |||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started