Question 5 (16 points) For this question, you have two options for submitting your answer 1. You may type your answer in the textbox below. 2. You may also type your answer using excel or word and then submit the file of your answer into the dropbox "Midterm 2". If you would like to use a spreadsheet for this question, please click here to have a spreadsheet open in a new tab. Once you are finished, you will need to click the "Click here to save your work" button. This will copy a link to your clipboard, which you can then paste into your answer field below, allowing your instructors to access your spreadsheet. Happy Feet Ltd. is the sole distributor of a popular brand of running shoes to local sporting stores in Southern Ontario. Happy Feet does not sell any products other than the single type of running shoes. On January 1, 2021, the company had the following opening account balances: Cash Accounts receivable (All from Store A) Allowance for doubtful accounts Inventory (500 pairs of shoes) Retained earnings Note: All accounts have normal balances. 40,000 39,000 4,200 25,000 98,000 During the three months (quarter) ended March 31, 2021, the company had the following transactions: During the three months (quarter) ended March 31, 2021, the company had the fellowing transaeliens Date Transaction Jan 7 Seid 300 pairs of shoes te Store B en eredit: Jan 11 Purchased 200 pairs of shees fer eash: Jan 15 Received payment from Store B in settlement of 50 percent of the accounts receivable from Jan. 11. Jan 28 Seid 199 pairs of shees te stere @ on credit: Feb 18 Received payment from Store A in settlement of accounts receivable. Feb 24 Accepled a return of 50 pairs of shoes from Store C and credit was given to the customer. Mars The Femaining balance of the amount owed by Store A was written off as uncollectible. Mar 15 Purehased 850 pairs of shoes for cash. Mar 20 Sold 900 pairs of shoes to store D on credit Amount 39,000 14,000 ? 14,000 37,000 7,000 ? 28,000 54,000 Additional information a: Happy Feet provides the terms 2/10, nel 30 for all its credit sales. b: Happy Feet uses the perpetual inventory method and the average cost method. C: Happy Feet Ltd. provides for uncollectible accounts as follows: Not yet due 1-30 days overdue 31-60 days overdue >60 days overdue d. There are no other transactions, revenues of expenses. 4% 7% 10% 15% Required: 1. Prepare all journal entries necessary to account for the above transactions and any necessary quarter end adjusting entries. Ignore income and sales taxes. 2. Prepare a statement of earnings down to the gross profit line for the three months ending March 31, 2021
