Question
On January 1, 2021, the general ledger of Boomer Company includes the following account balances: Accounts Debit Credit Cash $ 81,000 Accounts Receivable 54,000 Allowance
On January 1, 2021, the general ledger of Boomer Company includes the following account balances:
Accounts | Debit | Credit | ||||
Cash | $ | 81,000 | ||||
Accounts Receivable | 54,000 | |||||
Allowance for Uncollectible Accounts | $ | 8,000 | ||||
Inventory | 41,000 | |||||
Building | 81,000 | |||||
Accumulated Depreciation | 21,000 | |||||
Land | 211,000 | |||||
Accounts Payable | 31,000 | |||||
Notes Payable (6%, due in 3 years) | 45,000 | |||||
Common Stock | 111,000 | |||||
Retained Earnings | 252,000 | |||||
Totals | $ | 468,000 | $ | 468,000 | ||
The $41,000 beginning balance of inventory consists of 410 units, each costing $100.
During January 2021, the following transactions occurred:
January | 2 | Received a $31,000 6-month, 6% note on a loan Boomer made to Cowboys, Inc. | ||
January | 5 | Purchased 4,900 units of inventory on account for $539,000 ($110 each) with terms 1/10, n/30. | ||
January | 8 | Returned 120 defective units of inventory purchased on January 5. | ||
January | 15 | Sold 4,700 units of inventory on account for $611,000 ($130 each) with terms 2/10, n/30. Record 2 entries for this transaction. | ||
January | 17 | Customers returned 300 units sold on January 15. These units were originally purchased by Boomer on January 5. The units were placed in inventory to be sold in the future. Record 2 entries for this transaction. | ||
January | 20 | Received cash from customers on accounts receivable. This amount includes $47,000 from 2020 plus amount receivable on sale of 4,100 units sold on January 15. | ||
January | 21 | Wrote off remaining accounts receivable from 2020. | ||
January | 24 | Paid on accounts payable. The amount includes the amount owed at the beginning of the period plus the amount owed from purchase of 4,500 units on January 5. | ||
January | 28 | Paid cash for salaries during January, $39,000. | ||
January | 29 | Paid cash for utilities during January, $21,000. | ||
January | 30 | Paid dividends, $7,000. |
The following information is available on January 31, 2021 for adjusting entries at the end of the month.
- Boomer estimated that 10% of the January 31 accounts receivable balance will not be collected.
- Accrued interest on notes receivable for January.
- Accrued interest on notes payable for January.
- Accrued income taxes at the end of January for $6,100.
- Depreciation on the building, $3,100.
REQUIREMENTS
1. | Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 13) assuming a FIFO perpetual inventory system. The gross method is used for recording discounts on purchases and sales of inventory. | |
2. | Review the unadjusted Trial Balance in the 'Trial Balance' tab to confirm that debits equal credits and that ending account balances are shown correctly as debits or credits. The year on the Trial Balance tab is incorrectly shown as 2018 instead of 2021. | |
3. | Record adjusting entries on January 31 in the 'General Journal' tab (these are shown as items 14-18). | |
4. | Review the Adjusted Trial Balance as of January 31, 2021, in the 'Trial Balance' tab to confirm that debits equal credits and that ending account balances are shown correctly as debits or credits. | |
5. | Prepare a multiple-step income statement for the period ended January 31, 2021, in the 'Income Statement' tab. Select "Adjusted Trial Balance" at the top left. You may not use every line on the income statement. Enter "Net income" as the title for the last line. | |
6. | Prepare a classified balance sheet as of January 31, 2021, in the 'Balance Sheet' tab. Select "Adjusted Trial Balance" at the top left. Show any NONCURRENT liabilities on the line below the Current section. | |
7. | Record the closing entries in the 'General Journal' tab (these are shown as items 19 and 20). In the second closing entry, close all temporary accounts with debit balances (expenses, contra-revenues, dividends). | |
8. | Review the Post-closing Trial Balance as of January 31, 2021, in the 'Trial Balance' tab to confirm that only permanent account balances are included; temporary accounts should be closed. |
Step by Step Solution
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