Project Instructions

• There are two exercises in this Project 1.2; Journal Entries for Inventory & Accounts Receivable Part I and Journal Entries for Inventory & Accounts Receivable Part II.
• Please read the following instructions and review the table carefully. Then, enter answers for journal items [A] to [U] for Part I in the next two items in this Lesson, called Project 1.2 Journal Entries for Inventory & Accounts Receivable Part I and Project 1.2 Journal Entries for Inventory & Accounts Receivable Part II.

The Balance Sheet of the Illini as of 12/31/20X0:

Illini Company, Inc.Balance Sheet as of 12/31/20X0

Current Assets:

Cash 1,500,000

Accounts receivable, net 18,000

Inventory 50,000

Total current assets 1,568,000

Equipment 90,000

Goodwill 20,000

Total assets 1,678,000

Liabilities and shareholders' equity

Shareholders' equity:

Common stock, 20,000 shares outstanding, $1 par 20,000

Additional paid-in capital 280,000

Retained earnings 1,378,000

Total shareholders' equity 1,678,000

Total liabilities and shareholders' equity $1,678,000

Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the Additional paid-in capital account on the Balance Sheet.

Project 1.2 Topic: Inventory and Accounts Receivable Part 1

Illini Company uses a LIFO periodic inventory system and physically counts inventory only at year-end. Illini has the following transactions affecting inventory in 20X1 and 20X2 (suppose there is no loss of inventory):

1/1/20X1 Beginning balance: 1,000 units @ $50/unit

2/15/20X1 Purchase 6,000 units @ $65/unit in cash

4/1/20X1 Purchase 8,000 units @ $60/unit on account with terms of 2/10, n/30. Illini uses the gross method to record purchases.

4/9/20X1 Pay $392,000 ($400,000 less 2% discount) for 4/1/20X1 purchases

4/28/20X1 Pay the remaining $80,000 for 4/1/20X1 purchases

9/1/20X1 Sell and ship 10,000 units @ $100/unit on credit (i.e., not receiving cash right away) to a customer f.o.b. shipping point

12/28/20X1 Sell and ship 2,000 units @ $100/unit on credit to a customer f.o.b. destination

1/3/20X2 The customer receives the products shipped on 12/28/20X1

4/1/20X2 Purchase 8,000 units @ $70/unit in cash

9/1/20X2 Sell and ship 10,000 units @ $100/unit on credit to a customer f.o.b. shipping point

Project 1.2 Part 1 Balance Sheet

Date	Account Name		Debit	Credit
2/15/20X1	Inventory		[A]
		Cash
4/1/20X1	Inventory		[C]
		Accounts Payable		[D]
4/9/20X1	Accounts Payable		[E]
		Inventory		[F]
		Cash		[G]
4/28/20X1	Accounts Payable		[H]
		Cash		[I]
9/1/20X1	Accounts Receivable		[J]
		Sales revenue		[K]
12/31/20X1	Cost of goods sold		[L]
		Inventory		[M]
1/3/20X2	Accounts Receivable		[N]
		Sales revenue		[O]
4/1/20X2	Inventory		[P]
		Cash		[Q]
9/1/20X2	Accounts Receivable		[R]
		Sales revenue		[S]
12/31/20X2	Cost of goods sold		[T]
		Inventory		[U]