Review Assignment #2: Goulet Inc. Goulet Inc., set up as a privately held corporation, operating as a ready to wear garments retailer, of which 100% of the Common Shares are owned by Lawrence Goulet. You were hired to account for transactions for the month of August 2023, complete month end processing, prepare the financial statements and perform a financial ratio analysis as of the end of that month. They use perpetual inventory system and use the weigted average method to determine value for the inventory. Its balance sheet as at July 31, 2023, is presented below. Goulet Inc. Classified Balance Sheet As at July 31, 2023 Assets Cash $81,240 Accounts Receivable 30,090 Merchandise Inventory 27,600 Prepaid Insurance 9,200 Total Current Assets 148,130 Long-Term Assets Equipment 175,000 Accumulated Depreciation -92,000 83,000 Total Assets $231,130 Liabilities Current Liabilities Accounts Payable $29,200 Unearned Revenue $17,000 Salaries Payable $9,600 Current Portion of Bank Loan 22,560 Total Current Liabilities $78,360 Non-Current Liabilities Non-Current Portion of Bank Loan 33,840 Total Liabilities $112,200 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity Notes Relating to Balances: Customers and balances Vachon Inc. Dunn Inc. Picard Inc. Moreau Inc. Duncan Inc. Total 93,200 25,730 118,930 $231,130 Suppliers and Balances $7,120 Design Shirts Co. $15,400 $9,250 Printed Shirts Corp. $8,300 $6,620 Gabe Clothing Co. $5,500 $4,100 Total $29,200 $3,000 $30,090 The bank loan has an annual interest rate of 7% and has monthly principal payment of $1,880. Page 1 The Chart of Accounts (GL no.) is shown below: Account Description Account # Account Description Account # ASSETS REVENUE Cash 101 Sales Revenue 400 Petty Cash 105 Sales Discounts 405 Accounts Receivable 110 Sales Returns and Allowances 410 Merchandise Inventory 120 Interest Revenue 420 Prepaid Insurance 125 Other Income 430 Equipment 140 EXPENSES Accumulated Depreciation 145 Cost of Goods Sold 500 LIABILITIES Employee Benefits Expense 510 Accounts Payable 200 Depreciation Expense 515 Interest Payable 205 Insurance Expense 520 CPP Payable 220 Interest Expense 525 El Payable 225 Office Supplies Expense 530 Income Tax Payable 230 Rent Expense 535 Salaries Payable 235 Salaries Expense 540 Unearned Revenue 240 Bank Charges Expense 545 Bank Loan 245 Maintenance Expense 550 SHAREHOLDERS' EQUITY Entertainment Expense 555 Common Shares 300 Shipping Expense 560 Retained Earnings 305 Cash Over and Short 565 Required: a) Prepare the journal entries for the month of August. You will also need to update the inventory in the table for each purchase and sale, return or allowance, found under the Inventory Valuation tab of this workbook. b) Post the above journal entries to the general ledger accounts. c) Complete the bank reconciliation report. d) Record the journal entries from the bank reconciliation and post amounts to general ledger accounts. e) Prepare the multistep income statement, calculation of retained earnings, classified balance sheet found under the financial statements tab of this workbook. f) Answer the analysis questions from 'a' to 'i' found under the financial statements tab of this workbook. Page 2 Transactions for the month of August: Aug 1 Aug 1 Aug 5 Aug 5 Aug 7 Paid the amount owing from July 31 for salaries payable amounting to $9,600, Cheque #7107. Paid rent for August amounting to $1050, Cheque #7108 Goulet Inc. decided to establish a petty cash fund for the office. A cheque #7109 of $600 was issued and cashed. Purchased merchandise from Design Shirts Co. on account, invoice #425; 6,100 units at $26 each. Terms of the purchase were net 30, FOB Destination. The seller paid the shipping cost amounting to $522. Note: Update the Inventory Valuation table after each purchase. Sold mechandise on accout to Dunn Inc., 4,250 units at $60 each with invoice #100102. The invoice terms were 3/10, net 30, FOB Destination. Note: Update the Inventory Valuation table after each sale. Aug 12 Paid $15,400 with a cheque #7110 to Design Shirts Co. for the July invoices owing. Aug 14 Dunn Inc. paid invoice #100102 less the discount. Aug 15 Aug 15 The employees are paid bi-weekly. Paid the payroll for the first half of August, cheque #7111. Gross pay is $17,500, CPP is $893, El is $329 and income tax is $3,500. Use the general journal to record this. Record the employer's share of CPP (100%) and El (140%) of what was deducted from employees. Aug 18 Bought inventory from Gabe Clothing Co. with cheque #7112, 3,600 units at $22 per unit. Note: Update Inventory Valuation table to reflect purchase. Aug 20 Aug 20 Sold 3,000 units on account at $63 each with invoice #100103 to Moreau Inc.. The invoice term 3/10, net 30, FOB shipping point. Note: Update Inventory Valuation table. Received $7,120 from Vachon Inc. for a sale on account last month. Aug 25 Aug 31 Aug 31 Aug 31 The remaining balance of the petty cash account was $245. Total expenses incurred using the petty cash fund this month amounting to $230. In this amount, it includes the shipping cost incurred on August 7 in the amount of $166 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq #7113. Made monthly bank loan payment of $2,209 which includes $1,880 principal and $329 interest. Prepared the payroll for the second half of August to be paid on September 5. Gross pay is $19,000, CPP is $969, El is $357 and income tax is $3,800. The cheque will be prepared later. Use the general journal to record this. Record the employer's share of CPP (100%) and EI (140%) of what was deducted from employees. Page 3 General Journal Date Account Title and Explanation PR DR CR Page 4 General Journal Date Account Title and Explanation PR DR CR General Journal Date Account Title and Explanation PR DR CR Page 5