Prepare a journal entry andrecord adjusting journal entries

Chart of Accounts for Global Bike, Inc. The chart of accounts is a means of organizing general ledger accounts for grouping or sorting and to generate financial statements. Generally a unique numeric code (although alphanumeric can also be used) is given to an account based on its type. A block of codes may be set aside for specific types of accounts. For instance, in the case of GBI, account numbers 100000 through 109999 are reserved for \"cash\" or liquid asset accounts. The entire set of codes and blocks of code is called the chart of accounts. Below is GBI's chart of accounts followed by the account balances as of December 31, 20YY-1. NOTE: 20YY = 2015 the current year 20YY -1 = 2014 the prior year. (Note: Balances on December 31, 20YY-1 are the same as the balances on January 1, 20YY). Chart of Accounts - GBI GL00 G/L Account 100000 110100 110150 110200 200600 200900 200910 200920 200930 210000 211000 212000 215000 216000 220000 220110 220210 220310 220400 220500 220600 220700 300100 300200 300300 300400 300500 300600 300700 G/L Acct Long Text Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Interest Receivable Inventory-Operating Supplies Inventory-Raw Materials (Direct Post) Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) Inventory-Semi-finished Goods (Direct Post) Prepaid Insurance Prepaid Supplies Prepaid Advertising Prepaid Rent Deposits on Purchases Notes Receivable Land (Direct Post) Production Machinery, Equip & Fixtures(Dir.Post) Accumulated Depreciation-Machinery (Direct Post) Office Furniture Accumulated Depreciation-Office Furniture Office Equipment and Computers Accumulated Depreciation - Office Equipment Payables-Income Taxes Accounts Payable (Direct Posting Account) Payables-Interest Payables-Short-Term Notes Payables-Long-Term Notes Payables-Commissions Payables-Salaries and Wages 300800 310000 320000 321000 322000 329000 329100 330010 600000 610000 620000 630000 640000 650000 650100 700000 720000 720100 720200 720300 740000 740100 740200 740300 740400 740500 740600 740700 740800 740900 741000 741100 741200 741300 741500 741600 741700 741800 741900 742000 742100 760000 760100 770000 780000 Accrued Expenses Goods Receipt / Invoice Receipt Account Accrued Tax - Output Accrued Tax- Input Unearned Revenues Common Stock Additional Paid-in-Capital Retained Earnings (Direct Posting) Sales Revenue Sales Discount Miscellaneous Revenue Revenue Deductions Gain or Loss on Sale of Assets Customer Service Revenue Customer Service Revenue Settlement Labor Expense Raw Material Consumption Expense Finished Product Consumption Expense Trading Good Consumption Expense Semi-Finished Consumption Expense Supplies Expense Telephone and Internet Expense Legal and Professional Expense Rent Expense Insurance Expense Payroll Expense-Office Payroll Expense-Administrative Sales Expense Tax Expense - Property Tax Expense- Income Miscellaneous Expense Warranty Expense Bad Debt Expense Information Technology Expense Account Utilities Expense Manufacturing Output settlement Manufacturing Output Settlement Variance Depreciation Expense Advertising Expense Vendor Discounts Missed Shipping Expense Purchase Price Difference Production Variance Research and Development Cost of Goods Sold 2 Monthly Transactions and Closing Transactions For each event listed below, prepare a journal entry to reflect the event A couple of reminders and hints about transactions: 1. In general, this company does not recognize revenue until a product is shipped 2. In general, this company does not record ownership until an item is received 3. Trading Goods - these are items that are purchased for resale to customers such as bicycle accessories or safety products. 4. Sales tax is only recorded on a sale if noted below. DESCRIPTION OF EVENTS OCCURRING during the month of January, 20YY # Date Description of Event 1 January 3 2 January 3 3 January 3 4 January 7 5 January 10 6 January 10 7 January 10 8 January 12 Employees are paid monthly on the first business day of the month for work done in the previous month. The total payroll for the previous month is $100,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks. GBI received payment of $20,750 from Northwest Bikes in Seattle, WA for the balance due on their account. Windy City Bikes in Chicago, IL ordered $23,525 of bicycle accessories (trading goods inventory) from GBI. The cost of the accessories (to GBI) is $13,280. The goods were shipped to Windy City immediately via UPS using Windy City's UPS shipping number. GBI received $16,544 in safety product inventory ( trading goods) and $18,119 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. GBI paid the December 2014 accrued utility bill of $988. NOTE: GBI's account on the utility company website is updated at the end of each month when the meter is read. GBI uses this data to accrue the expenses at the end of each month (in this case on December 31st.) This allows recognition of the expense in the correct period. Expenses are usually accrued at the end of the month as \"Accrued Expenses.\" GBI's advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of October 2014 for six months of advertising, November 2014 through April 2015, (Two months of advertising have already been used through December 2014.) GBI received payment from Windy City Bikes for their order from January 3. GBI paid for the inventory order that they received from Dallas Bike 3 # Date 9 January 17 10 January 17 11 January 20 12 January 20 13 January 31 Description of Event Basics January 7. GBI paid an invoice from Lightbulb Accessory Kits for ordered goods that were received on December 20. The amount of the invoice from Lightbulb is $14,000 due net 30. Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,130 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $79,441. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes. GBI received notice that Bunky's Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,460 that Bunky's owed them. GBI sent a $15,000 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th. GBI pays sales tax once a quarter via the state's electronic filing and payment system. GBI filed its return and paid $3,063 in sales tax for the prior quarter ending December 31. Using these account balances and additional adjustment information below, record adjusting journal entries. Adjustment information as of January 31, 20YY not already given in the original transaction(s):): 1. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2010, are expected to last 20 years with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence). 2. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $996.*** SEE NOTE**** 3. GBI counted the office supplies (Inventory - Operating Supplies) on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $480. Any difference is expensed to supplies expense. 4 *** SEE NOTE**** 4. Liability insurance for the six month period October 1, 2014 - March 31, 2015 in the amount of $15,000 was paid September 1, 2014. Liability insurance is assumed to be utilized uniformly over the six month policy period. Determine any January 20YY expense. 5. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed. Ignore payroll taxes). *** SEE NOTE**** NOTE: You may get an error message on these entries that says \"Account xxx requires an assignment to a CO Object\". Please see the instructions for Entering Journal Entries for how to work through this message and resolve it. 5 Global Bike, Inc. Account Balances as of December 31, 20YY-1 These need to be input into SAP as your first journal entry. See Enter Journal Entry Instructions. 100000 110100 110150 200600 200900 200910 200920 210000 212000 220110 220210 220310 300200 300700 300800 320000 329000 330010 Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Inventory-Operating Supplies Inventory-Raw Materials (Direct Post) Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) Prepaid Insurance Prepaid Advertising Land (Direct Post) Production Machinery, Equip & Fixtures(Dir.Post) Debit Balance $367,584 109,420 5,800 700 32,000 281,298 66,474 7,500 3,200 500,000 815,000 Accumulated Depreciation-Machinery (Direct Post) Accounts Payable (Direct Posting Account) Payables-Salaries and Wages Accrued Expenses Accrued Tax - Output Common Stock Retained Earnings (Direct Posting) TOTAL Credit Balance $2,183,176 203,750 48,250 115,000 988 3,063 975,000 831,325 $2,183,176 Using these account balances and additional adjustment information below, record adjusting journal entries. Adjustment information as of January 31, 20YY not already given in the original transaction(s):): 1. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2010, are expected to last 20 years with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence). 2. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $996 3. GBI counted the office supplies (Inventory - Operating Supplies) on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $480. Any difference is expensed to supplies expense. 4. Liability insurance for the six month period October 1, 2014 - March 31, 2015 in the amount of $15,000 was paid September 1, 2014. Liability insurance is assumed to be utilized uniformly over the six month policy period. Determine any January 20YY expense. 5. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed. Ignore payroll taxes). 2 Global Bike, Inc. Account Balances as of December 31, 20YY-1 These need to be input into SAP as your first journal entry. See Enter Journal Entry Instructions. 100000 110100 110150 200600 200900 200910 200920 210000 212000 220110 220210 220310 300200 300700 300800 320000 329000 330010 Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Inventory-Operating Supplies Inventory-Raw Materials (Direct Post) Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) Prepaid Insurance Prepaid Advertising Land (Direct Post) Production Machinery, Equip & Fixtures(Dir.Post) Debit Balance $367,584 109,420 5,800 700 32,000 281,298 66,474 7,500 3,200 500,000 815,000 Accumulated Depreciation-Machinery (Direct Post) Accounts Payable (Direct Posting Account) Payables-Salaries and Wages Accrued Expenses Accrued Tax - Output Common Stock Retained Earnings (Direct Posting) TOTAL Credit Balance $2,183,176 203,750 48,250 115,000 988 3,063 975,000 831,325 $2,183,176 Using these account balances and additional adjustment information below, record adjusting journal entries. Adjustment information as of January 31, 20YY not already given in the original transaction(s):): 1. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2010, are expected to last 20 years with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence). 2. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $996 3. GBI counted the office supplies (Inventory - Operating Supplies) on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $480. Any difference is expensed to supplies expense. 4. Liability insurance for the six month period October 1, 2014 - March 31, 2015 in the amount of $15,000 was paid September 1, 2014. Liability insurance is assumed to be utilized uniformly over the six month policy period. Determine any January 20YY expense. 5. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed. Ignore payroll taxes). 2