PROBLEM Review Covering Chapters 5-7. (Inventory Costing, Petty Cash, Bad Debts & Notes Rec.) Includes: Journalizing and Adjusting)_Rusty Crowe started Crowe's Swimwear during the month of June 20X5. He leased a space in the Mid Rivers Mall and paid a part-time assistant to help him in the business. His chart of accounts is as follows: **Keep track of your Inventory! On a separate sheet of paper, you will need to keep track of the various bathing suits that you are buying and selling...For example: Chart of Accounts Assets: Revenues: 101 Cash 402 Sales 102 Petty Cash 410 Interest Revenue 104 Accounts Receivable 104.1 Allowance for Doubtful Accts. Expenses: 105 Merchandise Inventory 508 Cost of Goods Sold 110 Prepaid Rent 511 Wages Expense 111 Interest Receivable 514 Advertising Expense 112 Prepaid Insurance 516 Rent Expense 125 Note Receivable 519 Telephone Expense 131 Supplies 520 Supplies Expense 181 Equipment 525 Depreciation Expense 181.1 Accumulated Depreciation 527 Insurance Expense 530 Utilities Expense Liabilities: 551 Cash Over & Short 202 Accounts Payable 550 Miscellaneous Expense 209 Wages Payable 553 Bad Debt Expense Black String Bikinis 50@ $5 Red Bathing Suits 100@ $8 700 Income Summary Stockholder's Equity: 300 Common Stock 312 Dividends 315 Retained Earnings Jun 1 2 3 4 5 7 9 10 12 13 Rusty invested $40,000 cash in the company in exchange for 40,000 shares of $1 par, common stock. Purchased Store Equipment for $3,000. Paid $1,500 immediately but put the rest on account. Prepaid 6 months rent in advance, $4, 800 Created a $100 Petty Cash account. Purchased supplies for cash, $1,500 Purchased 50 black string bikinis, (model #211) for $5 each. (paid cash) Purchased 100 black string bikinis, (model #211) for $8 each. (paid cash) Purchased 70 red bathing suits, (model #848) for $14 each. (paid cash) Purchased 30 red bathing suits, (model #848) for $20 each. (paid cash) On the first day that the store was open, it sold 60 black bikinis for $100 each and 40 red bathing suits for $150 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) Purchased a one year insurance policy for $1,200 Purchased 25 green thong bikinis, on account, (model #148) for $10 each. Purchased 50 green thong bikinis, (model #148) for $12 each. (paid cash) 14 15 18 19 22 24 25 27 28 Purchased 100 floral halter bathing suits, (model #877) for $20 each. (paid cash) Purchased 60 floral halter bathing suits, (model #877) for $22 each. (paid cash) The company declared and paid a $200 dividend to the sole shareholder. Collected $8500 of the amount owed from customers from the sales made earlier. Paid the telephone bill, $95 Reimbursed the Petty Cash account. The fund contained: $6.00 and had the following receipts: Supplies $35.00 and Miscellaneous Expenses $58.00. Paid the part-time worker, $250 Received the bank statement from the bank. The bank statement showed that the bank issued a credit memorandum for $33 interest earned and a debit memorandum for the $20 monthly service charge. After entering these two adjusting entries, the cash account shows $ 32,224. Merch. Inv=$5,580; COGS=$1,220 29 30 July 2 3 6 10 13 14 15 19 20 Today, the store had a swimwear fashion show and it sold 50 black string bikinis for $110 each and 45 red bathing suits for $150 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) The day after the fashion show, customers came in and purchased 40 green thong bikinis for $90 each and 120 floral halter bathing suits for $130 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) Pamela Anterson, a customer, called and said that she had declared bankruptcy and would not be able to pay for her black string bikini for which she still owed the store. She paid $110 for it earlier and that is what the store had to write off. (The company uses the Allowance Method of accounting for Bad debts...) Paid the electric bill for June, $320. Received payment from customers from sales made in June and from the Fashion Show, $ 13,750 Received the newspaper advertising bill, $160, it is due in 30 days. Paid the part-time worker, $350 Collected $2,100 of the amount owed from customers from the sales made earlier Accepted a $6,000, 9%, 120 day note dated today, in granting a time extension on a past-due account receivable. Paid the advertising bill which was received earlier, $160 Paid $1,000 on the amount owed for the store equipment purchased last month. Reimbursed the Petty Cash account. The fund contained: $14.50 and had the following receipts: Supplies $45.00 and Miscellaneous Expenses $38.00. Received the bank statement from the bank. The bank statement showed that the bank issued a credit memorandum for $65 interest earned and a debit memorandum for the $20 monthly service charge. In the statement, the bank had also returned an NSF check from one of our customers for $260. Lastly, Rusty also noticed that the check issued for the store equipment, $1,000, had not yet cleared the bank. After entering the adjustments needed, the cash account shows $ 45,943.50. 21 24 29 30 (check figures: Cash= $45,943.50; Supplies= $1,580; Accts Rec.= $13,250; Sales= $43,450; COGS=5,220 Totals= $84,298) Adj 1 ) Make adjustment for the two months of insurance that has expired Adj 2) Make adjustment for the two months of rent which has expired Adj 3) Supplies on hand at the end of the year is $450. Adj 4) Depreciation on the Stage equipment is $100 Adj 5) Wages owed to the part-time worker are $250. These are due to be paid next week. Adj 6) Based on an aging of Accounts Receivable it was determined that $180 would not be collected and this should be the ending balance in the Allowance account. The company uses the Allowance Method for determining bad debts so you will need to determine the correct ending credit balance Adj 7) Accrue 10 days of interest on the Note Receivable. (Face x Rate x 10/360 days) PROBLEM Review Covering Chapters 5-7. (Inventory Costing, Petty Cash, Bad Debts & Notes Rec.) Includes: Journalizing and Adjusting)_Rusty Crowe started Crowe's Swimwear during the month of June 20X5. He leased a space in the Mid Rivers Mall and paid a part-time assistant to help him in the business. His chart of accounts is as follows: **Keep track of your Inventory! On a separate sheet of paper, you will need to keep track of the various bathing suits that you are buying and selling...For example: Chart of Accounts Assets: Revenues: 101 Cash 402 Sales 102 Petty Cash 410 Interest Revenue 104 Accounts Receivable 104.1 Allowance for Doubtful Accts. Expenses: 105 Merchandise Inventory 508 Cost of Goods Sold 110 Prepaid Rent 511 Wages Expense 111 Interest Receivable 514 Advertising Expense 112 Prepaid Insurance 516 Rent Expense 125 Note Receivable 519 Telephone Expense 131 Supplies 520 Supplies Expense 181 Equipment 525 Depreciation Expense 181.1 Accumulated Depreciation 527 Insurance Expense 530 Utilities Expense Liabilities: 551 Cash Over & Short 202 Accounts Payable 550 Miscellaneous Expense 209 Wages Payable 553 Bad Debt Expense Black String Bikinis 50@ $5 Red Bathing Suits 100@ $8 700 Income Summary Stockholder's Equity: 300 Common Stock 312 Dividends 315 Retained Earnings Jun 1 2 3 4 5 7 9 10 12 13 Rusty invested $40,000 cash in the company in exchange for 40,000 shares of $1 par, common stock. Purchased Store Equipment for $3,000. Paid $1,500 immediately but put the rest on account. Prepaid 6 months rent in advance, $4, 800 Created a $100 Petty Cash account. Purchased supplies for cash, $1,500 Purchased 50 black string bikinis, (model #211) for $5 each. (paid cash) Purchased 100 black string bikinis, (model #211) for $8 each. (paid cash) Purchased 70 red bathing suits, (model #848) for $14 each. (paid cash) Purchased 30 red bathing suits, (model #848) for $20 each. (paid cash) On the first day that the store was open, it sold 60 black bikinis for $100 each and 40 red bathing suits for $150 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) Purchased a one year insurance policy for $1,200 Purchased 25 green thong bikinis, on account, (model #148) for $10 each. Purchased 50 green thong bikinis, (model #148) for $12 each. (paid cash) 14 15 18 19 22 24 25 27 28 Purchased 100 floral halter bathing suits, (model #877) for $20 each. (paid cash) Purchased 60 floral halter bathing suits, (model #877) for $22 each. (paid cash) The company declared and paid a $200 dividend to the sole shareholder. Collected $8500 of the amount owed from customers from the sales made earlier. Paid the telephone bill, $95 Reimbursed the Petty Cash account. The fund contained: $6.00 and had the following receipts: Supplies $35.00 and Miscellaneous Expenses $58.00. Paid the part-time worker, $250 Received the bank statement from the bank. The bank statement showed that the bank issued a credit memorandum for $33 interest earned and a debit memorandum for the $20 monthly service charge. After entering these two adjusting entries, the cash account shows $ 32,224. Merch. Inv=$5,580; COGS=$1,220 29 30 July 2 3 6 10 13 14 15 19 20 Today, the store had a swimwear fashion show and it sold 50 black string bikinis for $110 each and 45 red bathing suits for $150 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) The day after the fashion show, customers came in and purchased 40 green thong bikinis for $90 each and 120 floral halter bathing suits for $130 each-all sales were on store credit. (The store uses the LIFO method to account for cost of goods sold.) Pamela Anterson, a customer, called and said that she had declared bankruptcy and would not be able to pay for her black string bikini for which she still owed the store. She paid $110 for it earlier and that is what the store had to write off. (The company uses the Allowance Method of accounting for Bad debts...) Paid the electric bill for June, $320. Received payment from customers from sales made in June and from the Fashion Show, $ 13,750 Received the newspaper advertising bill, $160, it is due in 30 days. Paid the part-time worker, $350 Collected $2,100 of the amount owed from customers from the sales made earlier Accepted a $6,000, 9%, 120 day note dated today, in granting a time extension on a past-due account receivable. Paid the advertising bill which was received earlier, $160 Paid $1,000 on the amount owed for the store equipment purchased last month. Reimbursed the Petty Cash account. The fund contained: $14.50 and had the following receipts: Supplies $45.00 and Miscellaneous Expenses $38.00. Received the bank statement from the bank. The bank statement showed that the bank issued a credit memorandum for $65 interest earned and a debit memorandum for the $20 monthly service charge. In the statement, the bank had also returned an NSF check from one of our customers for $260. Lastly, Rusty also noticed that the check issued for the store equipment, $1,000, had not yet cleared the bank. After entering the adjustments needed, the cash account shows $ 45,943.50. 21 24 29 30 (check figures: Cash= $45,943.50; Supplies= $1,580; Accts Rec.= $13,250; Sales= $43,450; COGS=5,220 Totals= $84,298) Adj 1 ) Make adjustment for the two months of insurance that has expired Adj 2) Make adjustment for the two months of rent which has expired Adj 3) Supplies on hand at the end of the year is $450. Adj 4) Depreciation on the Stage equipment is $100 Adj 5) Wages owed to the part-time worker are $250. These are due to be paid next week. Adj 6) Based on an aging of Accounts Receivable it was determined that $180 would not be collected and this should be the ending balance in the Allowance account. The company uses the Allowance Method for determining bad debts so you will need to determine the correct ending credit balance Adj 7) Accrue 10 days of interest on the Note Receivable. (Face x Rate x 10/360 days)