N/30 means pay within 30 days

cfri Fall Back Inc. is a merchandising business headquartered in the U.S. and selling primarily to wholesalers. The accounting information system is based upon the principles and rules of U.S. Generally Accepted Accounting Principles (GAAP). Business activity is recorded on an accrual basis. The company employs the perpetual inventory system in accounting for its merchandise inventory. Sales revenue is recorded at the point of sale net of customer discounts. Purchases of inventory are recorded at invoice price. Fall Back operates using a January through December fiscal year The balances of the accounts in the general ledger as of November 30 of the current fiscal year are as follows: (Assume all balances are normal balances,) 110 Cash 111 Accounts Receivable 12 Allowance for bad debts 13 Allowance for sales returns 65,900 200,200 2,110 114 Inventory 376,400 115 Estimated Returns Inventory 116 Supplies 117 Prepaid Insurance 121 Investments in Available for sale securities Noncurrent (net) 1 12.100 30,000 18,300 140,000 997,100 289,600 31 Land 132 Equipment 133 Accumulated Depreciation-Equip 141 Deferred Tax Asset 211 Accounts Payable 212 Salaries Payable 213 Refund labity 214 Deferred Rent Revenue 111,300 33,200 50,000 215 Notes Payable (due in 8 months) 216 Interest Payable 217 Income taxes payable 311 Common Stock, $1 Par 312 Additional paid in capital 313 Retained Earnings 59,000 600,800 1,200 314 Accumulated Other Comprehensive Incomel/Loss) 315 Income 316 Dividends 411 Sales 75,000 4,381,1 0 412 Sales returns 511 Cost of Goods Sold 521 Sales Salaries Expense 522 Advertising Expense 523 Delivery Expense 524 Depreciatiorn 79,200 2,122,100 650,600 220,000 36,000 29,600 42,800 407,000 125,000 nse- Equip. 525 Miscellaneous Seling Expense 526 Office Salaries Expense 527 Rent Expense 528 Insurance Expense 529 Supplies Expense 530 Bad debts expense 531 Income taxes expense 611 Rent Revenue 711 Interest Expense 3,000 There are 100,000 shares of common stock outstanding. During December, the last month of the fiscal ye fllowing transactions were completed Dec.1 Received $3,000 in advance payment for December, January, and February rent of warehous as h 3 Purchased $24,500 of merchandise on account, FOB shipping point, terms 4Paid transportation costs of $475 on the December 3 purchase 11 Sold merchandise on account, $12,700, FOB destination, 2/15,n/30. The cost of the merchandise S7 Returned $4,000 of the merchandise purchased on December 3. sold was S7 600. 12 Paid transportation charges of $300 for the merchandise sold on December 11 13 Paid for the purchase of December 3 less the return and the discount 15 Received payment from customers on account $8,430. Amount received is net of discount 22 Received payment on account for the sale of December 11, less the discount. A 23 Purdasessaaressonaccourt,ofo.ssone.ofthemer andt ta 27 Paid sales salaries, $2,300, and office salaries, $1,400. Sa tn Sa 28 Sold merchandise for cash, $16,500, The cost of the merchandise sold was $112 30 Paid rent on parking lot for December, $1,000 31 Paid cash for a web page advertisement, $400. Adu 8ta, sma INSTRUCTIONS: ROUND ALL AMOUNTS TO THE NEAREST DOLLAR, AS NECESSARY . Enter the balances of each of the accounts as of November 30 in the appropriate balance column of a T account (use account names and numbers) or a four-column account. [You are creating the General Ledger.] Journalize (using the General Journal) the transactions for December 2. 3. Post the December journal entries to the General Ledger, computing the year-end balances after all posting is completed Prepare an Unadjusted Trial Balance as of December 31. [Note: You may use an optional end-of- period worksheet if you choose to.] 5. Analyze the following adjustment data assembled at the end of December. Use the adjustment data to journalize, then post, the necessary adjusting entries Merchandise inventory on hand a December 31, perphysicalcourt,$301,500 Allowance for bad debts must be increased to 3% of year end accounts receivable a b C Insurance coverage expired during the year, $12,350 d. Supplies on hand at December 31, $2. 100 e Additional depreciation to be recorded on the equipment for the year $14,130 f. Accrued sales salaries $1,800 and accrued office salaries $890 on December 31 Accrued interest on the note payable as of December 31, $240 9 h. Record rent revenue earned as of December 31 from the advance payment received on December 1 (as described above) Estimated additional customer returns expected to be O 8% of year-end sales revenue and cost of additional expected returned inventorys expected to be $27,000 70% of additional expected returns are estimated to be from sales on account 30% of additional expected returns are estimated to be from cash sales. (For help: see page 360 in your text ) Income taxes must be recorded at 30% of income before income taxes 30% tax rate applies on all tax-related items Record unrealized loss on available for sale secunties of $2150. (This entry debits A ($1505) and Deferred tax asset ($645) and credits the Investment account ($21 i. oci Prepare an Adjusted Trial Balance as of December 31 Prepare a multiple-ste Shareholders' p Income Statement, a Statement of Comprehensive Income, a Statement of 7. Equity, and a classified Balance Sheet at the end of the December 31 fiscal year 8. Journalize and post the necessary closing entries Prepare a Post-Closing Trial Balance as of December 31