Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts

One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) Common Stock Retained Earnings * credit balance. $ 52,200 13,600 398* 3,500 5,200 1,590 36,000 21,600 4,520 The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $130 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $3,500. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. . In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of inventory. e. The 40 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). g. Sales of 60 units of inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. i. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. j. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue interest for January on the notes payable on 01/31. s. Accrue interest for January on Jeff Letrotski's note on 01/31 (see a). Requirement General Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis General Journal tab - Prepare all January journal entries and adjusting entries for items (a) to (s). Review the 'General Ledger' and the adjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances. Trial Balance tab - Review the adjusted 'Trial Balance' as of January 31. Income Statement tab - Prepare an income statement for the period ended January 31 in the 'Income Statement' Tab. Statement of Retained earnings - Prepare a statement of retained earning in the 'Statement of Retained earnings' Tab. Balance Sheet tab - Prepare a classified balance sheet as of January 31 in the 'Balance Sheet' Tab. Analysis tab - Using the information from the requirements above, complete the 'Analysis' tab. < Requirement General Journal One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Common Stock Retained Earnings * credit balance. The following Information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver In January; this obligation was recorded In Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02 covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance In December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (in c). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). General Requirement Journal General Ledger Trial Balance Income Statement Statement of Retained Balance Sheet Analysis Earnings Prepare all January journal entries and adjusting entries for items (a) to (s). Review the 'General Ledger' and the adjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 8 7 8 25 Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six-month note, at 10% annual interest. Jeff signs the Note: Enter debits before credits. Date January 01 General Journal Debit Credit Record entry Clear entry View general journal < Requirement General Ledger > One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Common Stock Retained Earnings * credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual Inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02 covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courler $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance In December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (in c). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). Requirement General Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances. Unadjusted General Ledger Account Cash Accounts Receivable No. Date December 31 Debit Credit Balance 52,200 No. Date Debit Credit Balance December 31 13,600 No. Date December 31 Allowance for Doubtful Accounts Debit Inventory Credit Balance No. 390 Date December 31 Debit Credit Balance 3,500 No. Date Accounts Payable Debit Credit Balance No. December 31 1,590 Date December 31 Deferred Revenue Debit Credit Balance 5,200 Notes Payable (long-term) No. Date December 31 Debit Credit Balance 38,000 No. Date December 31 Common Stock Debit Credit Balance 21,600 No. Date December 31 Retained Earnings Debit Credit Balance 4,520 < General Journal Trial Balance > One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) Connon Stock $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Retained Earnings credit balance. The following Information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual Inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02 covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courler $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance In December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (in c). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). General Requirement Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis Notice the dropdown below that gives the options to select the unadjusted or adjusted trial balance. The option you choose will be the values used to populate the income statement and balance sheet tabs. Unadjusted Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Accounts Payable Deferred Revenue Notes Payable (long-term) *Common Stock Retained Earnings Total ONE TRICK PONY Trial Balance January 31, 2022 Account Title < General Ledger Income Statement > Debit Credit $ 52,200 13,600 390 3,500 1,590 5,200 38,000 21,600 4,520 $ 69,300 $ 69,300 One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) Common Stock $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Retained Earnings * credit balance. The following Information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded In Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courler $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (In c). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). General Requirement Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis Choose the appropriate accounts to be reported on the income statement. Select the 'adjusted' from the dropdown, which will then populate the balances in those accounts from the trial balance. Unadjusted Net Sales ONE TRICK PONY Income Statement For the Month Ended January 31 Income from Operations Interest Revenue (Expense), net < Trial Balance Statement of Retained Earnings > One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Common Stock Retained Earnings *credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courler $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (Inc). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). General General Income Requirement Trial Balance Journal Ledger Statement Statement of Retained Earnings Balance Sheet Analysis Prepare the statement of retained earnings at the end of January 31. Enter the appropriate descriptions needed to complete the Statement of Retained Earnings. Unadjusted ONE TRICK PONY Statement of Retained Earnings For the Month Ended January 31 Balance, January 1 4,520 Balance, January 31 < Income Statement Balance Sheet > One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Common Stock Retained Earnings * credit balance. The following Information is relevant to the first month of operations in the following year: OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual Inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courler $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (Inc). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). Requirement General Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis Use the dropdowns to select the accounts properly included on the classified balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection. Unadjusted Current Assets Total Assets ONE TRICK PONY Balance Sheet At December 31 Assets Liabilities Current Liabilities Total Current Liabilities Total Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity < Statement of Retained Earnings Analysis > One Trick Pony (OTP) Incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) $ 52,200 13,600 390* 3,500 5,200 1,590 36,000 21,600 4,520 Common Stock Retained Earnings credit balance. The following Information is relevant to the first month of operations in the following year. OTP will sell Inventory at $130 per unit. OTP's January 1 Inventory balance consists of 50 units at a total cost of $3,500. OTP's policy Is to use the FIFO method, recorded using a perpetual Inventory system. In December, OTP received a $5,200 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,040 was unpaid and recorded in Accounts Payable at December 31. OTP's notes payable mature in three years, and accrue Interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a six- month note, at 10% annual Interest. Jeff signs the promissory note, which indicates the principal and all Interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $160 Insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of Inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of Inventory. e. The 40 units that OTP's customer paid for in advance In December are delivered to the customer on 01/06. f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of Inventory (in c). g. Sales of 60 units of Inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,400. J. Wrote off a $1,190 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,080 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $480 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $120 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of Inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The Inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,400 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue Interest for January on the notes payable on 01/31. s. Accrue Interest for January on Jeff Letrotski's note on 01/31 (see a). Requirement General Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Analysis For the month ended January 31, indicate the (i) gross profit percentage, (ii) number of units in ending inventory, and (iii) cost per unit of ending inventory. (Round percentage answer to 1 decimal place.) Gross profit percentage Number of units in ending inventory % Units per Unit Cost per unit of ending inventory If OTP had used the percentage of sales method (using 2% of Net Sales) rather than the aging method, what amounts would OTC's January financial statements have reported for (i) Bad Debt Expense and (ii) Accounts Receivable, net? Bad Debt Expense Accounts Receivable, net If OTP had used LIFO rather than FIFO, what amount would OTC have reported for Cost of Goods Sold on 01/10? Cost of Goods Sold Balance Sheet Analysis

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cima Official Learning System Fundamentals Of Business Mathematics

Authors: Graham Eaton

4th Edition

1856177831, 978-1856177832

More Books

Students also viewed these Accounting questions

Question

u = 5 j , v = 6 i Find the angle between the vectors.

Answered: 1 week ago

Question

Describe the seven standard parts of a letter.

Answered: 1 week ago

Question

Explain how to develop effective Internet-based messages.

Answered: 1 week ago

Question

Identify the advantages and disadvantages of written messages.

Answered: 1 week ago