The Fashion Rack is a reta merchandising business that sells brand name clothing at discount prices. The firm is owned and managed by Teresa Loley, who started the business on April 20X1. This project will give you an opportunity to put your knowledge of accounting into practice as you handle the accounting work of The Fashion Rack during the month of October 20X1. INTRODUCTION The Fashion Rack has a monthly accounting period. The firm's chart of accounts is shown below. The journals used to record transactions are the sales journal, purchases journal, cash receipts journal, cash payments journal and general joumal Postings are made from the journals to the accounts receivable ledger, accounts payable ledger, and general ledger. The employees are paid at the end of the month. A computerized payroll service prepares all payroll records and checks. DATE TRANSACTIONS oct. ' 1 Issued Check 601 for $4,400 to pay Properties Management, Inc., the monthly rent. 1 signed a three-month radio advertising contract with Cable Station KTLE for $5,100; issued Check 602 to pay the full amount in advance. 2 Received 3520 from Megan Greening, a credit customer, in paynent of her account. 2 Issued Check 603 for $17, 82e to remit the sales tax owed for July through September to the State Tax Commission. 2 Issued Check 684 for 57, 673.40 to A Fashion Statement, a creditor, in paynent of Invoice 9307 (57,830), less a cash discount ($156.60) 2 Sold nerchandise on credit for $2,480 plus sales tax of $124 to Marian Salib, Sales Slip 241. 4 Issued Check tes for $1, ese to BMX Supply Co. for supplies. 4 Issued check 606 for 58,594.60 to Unique Styles, a creditor, in payment of Invoice 5671 (58, 770), less a cash discount (5175.40) 5 collected $1,700.be on account fron Any Trinh, a credit customer. 5 Accepted a return of merchandise from Mariam Salab. The merchandise was originally sold on Sales Slip 241, dated s Issued Check 687 for $1,666 to Classy Threads, a creditor, in payment of Invoice 3292 ($1,700). less a cash discount (534) 6 Had cash sales of $18, 600 plus sales tax of $930 during October 1-6. Received a check from Janes Helmer, a credit custoner, for $832 to pay the balance he owes 8 Issued Check 608 for $1,884 to deposit social security tax (S702), Medicare tax ($162), and federal income tax withholding ($1,028) from the September payroll. Record this check in the cash payments journal. 9 sold nerchandise on credit for $2,ase plus sales tax of $102.50 to Ema Maldonado, Sales Slip 242. 10 Issued Check 609 for $1,525 to pay The Daily News for a newspaper advertisement that appeared in October 11 Purchased merchandise for $4,828 fron A Fashion Statement, Invoice 9422, dated October 9; the terms are 2/10, 1/38 12 Issued Check 612 for $395 to pay freight charges to Ace Freight Company, the trucking company that delivered merchandise from A Fashion Statement on September 27 and October 11. 13 Had cash sales of $13, 200 plus sales tax of 5666 during October 8.13 15 Sold nerchandise on credit for $1,940 plus sales tax of 397 to Jates Helmer Sales Slip 243. 16 Purchased discontinued merchandise from Acne Jobbers: paid for it innediately with Check 611 for $5,120. 16 Received 3520 on account from Marian Salib, a credit customer 16 Issued Check 612 for $4,723.6e to A Fashion Statement, a creditor, in payment of Invoice 9422 (54,828.0), less cash discount ($96.40) 19 Issued Check 63 for $7,400 to Teresa Lojay as a withdrawal for personal use. 20 Had cash sales of $13,500 plus sales tax of 5675 during October 15 20 22 Issued Check 614 to City Utilities for $1,492 to pay the monthly electric bill. 24 Sold merchandise on credit for $820 plus sales tax of 541 to Megan Greening, Sales Slip 244. 25 Purchased merchandise for $3,586 from Classy Threads, Invoice 3418, dated October 22: the terms are 2/le, n/30. 26 Issued Check 615 to Regional Telephone for $948 to pay the monthly telephone bill. 27 Had cash sales of $14,240 plus sales tax of 5712 during October 22-27 29 Received Credit Menor andun 175 for 5430 from classy Threads for defective goods that were returned. The original purchase was recorded on October 25. 20 Sold merchandise on credit for $3,450 plus sales tax of 5172.o Any Tranh Sales Slip 245. 29 Recorded the October payroll. The records prepared by the payroll service show the following totals: earnings, $10, 800, social security. 5782.00: Medicare. $152.00; income tax, $2.028: and net pay, 18,916. The excess withholdings corrected an error nade in withholdings in September 29 Recorded the employer's payroll taxes, which were calculated by the payroll services social security. 5702; Medicare, $162; federal unemployment tax, 5118; and state unemployment tax. 5584. This, too, reflects an understatement of taxes recorded in September and corrected in this month. 30 Purchased merchandise for $4.9 from Unique styles, Invoice 5821, dated October 26, the terms are 1/10, 1/30 31 Issued Checks 616 through 610, totaling $8,916.60, to enployees to pay October payroll For the sake of simplicity. enter the total of the checks on a single line in the cash payments journal 31 Issued Check 626 for 5525 to At Janitors for October janitorial services. 510, 180; social security, 5762.00; Medicare, 5162.68 income tax, 31, 620, and net pay, 58,916. The excess withholdings corrected an error made in withholdings in September 29 Recorded the employer's payroll taxes, which were calculated by the payroll service social security, $702; Medicare, 3162; Federal unanploynent tax, $118) and state unemployment tax, $584. This, too, reflects an understatement of taxes recorded in September and corrected in this month. 30 Purchased merchandise for 34, 680 from unique styles, Invoice 5821, dated October 26, the terms are 1/10, n/30. 31 Issued Checks 616 through 619, totaling $8,916.60, to employees to pay October payroll. For the sake of simplicity, enter the total of the checks on a single line in the cash payments journal. 31 Issued Check 620 for $525 to At Janitors for October janitorial services. 31 Had cash sales of $1,800 plus sales tax of 890 for October 29-31. ADJUSTNENTS 31 During October, the firm had net credit sales of $10, 140. From experience with similar businesses, the previous accountant had estimated that 1.0 percent of the firm's net credit sales would result in uncollectible accounts Record an adjustment for the expected loss from uncollectible accounts for the month of October 31 on October 31, an inventory of the supplies showed that itens costing $2,740 were on hand. Record an adjustment for the supplies used in October 31 on September 30, 20x1, the firm purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October 31 On October 1, 201, the fire signed a three-month advertising contract for $5,109 with a local cable television station and paid the full amount in advance. Record an adjustment for the expired advertising for October 31 On April 1, 20x1, the fire purchased equipment for $83,06. The equipment was estimated to have a useful life of five years and a salvage value of $12,500. Record an adjustment for depreciation on the equipment for October 31 Based on a physical count, ending merchandise inventory was determined to be $82,260. Required: Part 1 1. Sales Journal, Purchases Journal, Cash Receipts Journal, Cash Payments Journal, and General Journal Tabs: Analyze the transactions for October and record each transaction in the proper journal. 2. General Ledger, Accts Rec Sub Ledger, and Accts Pay Sub Ledger Tabs: Post the individual entries that involve customer and creditor accounts from the journals to the subsidiary ledgers on a daily basis. Post the individual entries that appear in the general journal and in the Other Accounts sections of the cash receipts and cash payments journals to the general ledger on a daily basis. 3. Sales Journal, Purchases Journal, Cash Receipts Journal, Cash Payments Journal Tabs Total, prove, and rule the special journals as of October 31, 20X1. Post the column totals from the special journals to the general ledger accounts. Scroll down to the bottom to complete both sets of Tabs. Complete this question by entering your answers in the tabs below. Requirement Sales Journal Purchases Journal Cash Receipts Journal Cash Payments Journal General Journal General Ledger Acets Rec Ledger Acets Pay Ledger Part 2 4. Schedule of Acets Rec and Schedule of Acets Pay Tabs Check the accuracy of the subsidiary ledgers by preparing a schedule of accounts receivable and a schedule of accounts payable as of October 31, 20X1. Compare the totals with the balances of the Accounts Receivable account and the Accounts Payable account in the general ledger. 5. Worksheet Tabs Check the accuracy of the general ledger by preparing a trial balance in the first two columns of a 10-column worksheet. Make sure that the total debits and the total credits are equal 6. Worksheet Tabs Complete the Adjustments section of the worksheet using the adjusting transactions 7 Worksheet Tabs Complete the Adjusted Trial Balance section of the worksheet. Then determine the net income ornet loss for October and complete the worksheet 8. Income Statement Tabs Prepare a classified income statement for the month ended October 31, 20X1. (The firm does not divide its operating expenses into selling and administrative expenses.) 9. Sent of Owner's Equity Tab Prepare a statement of owner's equity for the month ended October 31, 20X1 10. Balance Sheet Tabs Prepare a classified balance sheet as of October 31, 20XL 11. Adjusting and Closing Tab: Joumalize and post the adjusting entries and then the closing entries to the General Joumal. 12. Postclosing Tabs Prepare a postclosing trial balance. Complete this question by entering your answers in the tabs below. Requirement Schedule of Schedule of Acts Rec Acets Pay Worksheet Income Statement Stent of Equity Balance Sheet Adesting and Casing Posting Check the accuracy of the Accts Rec subsidiary ledger by preparing a schedule of accounts receivable as of October 31, 20X1. Compare the totals with the balance of the Accounts Receivable account in the general ledger. (Round your answers to 2 decimal places.) The Fashion Rack is a reta merchandising business that sells brand name clothing at discount prices. The firm is owned and managed by Teresa Loley, who started the business on April 20X1. This project will give you an opportunity to put your knowledge of accounting into practice as you handle the accounting work of The Fashion Rack during the month of October 20X1. INTRODUCTION The Fashion Rack has a monthly accounting period. The firm's chart of accounts is shown below. The journals used to record transactions are the sales journal, purchases journal, cash receipts journal, cash payments journal and general joumal Postings are made from the journals to the accounts receivable ledger, accounts payable ledger, and general ledger. The employees are paid at the end of the month. A computerized payroll service prepares all payroll records and checks. DATE TRANSACTIONS oct. ' 1 Issued Check 601 for $4,400 to pay Properties Management, Inc., the monthly rent. 1 signed a three-month radio advertising contract with Cable Station KTLE for $5,100; issued Check 602 to pay the full amount in advance. 2 Received 3520 from Megan Greening, a credit customer, in paynent of her account. 2 Issued Check 603 for $17, 82e to remit the sales tax owed for July through September to the State Tax Commission. 2 Issued Check 684 for 57, 673.40 to A Fashion Statement, a creditor, in paynent of Invoice 9307 (57,830), less a cash discount ($156.60) 2 Sold nerchandise on credit for $2,480 plus sales tax of $124 to Marian Salib, Sales Slip 241. 4 Issued Check tes for $1, ese to BMX Supply Co. for supplies. 4 Issued check 606 for 58,594.60 to Unique Styles, a creditor, in payment of Invoice 5671 (58, 770), less a cash discount (5175.40) 5 collected $1,700.be on account fron Any Trinh, a credit customer. 5 Accepted a return of merchandise from Mariam Salab. The merchandise was originally sold on Sales Slip 241, dated s Issued Check 687 for $1,666 to Classy Threads, a creditor, in payment of Invoice 3292 ($1,700). less a cash discount (534) 6 Had cash sales of $18, 600 plus sales tax of $930 during October 1-6. Received a check from Janes Helmer, a credit custoner, for $832 to pay the balance he owes 8 Issued Check 608 for $1,884 to deposit social security tax (S702), Medicare tax ($162), and federal income tax withholding ($1,028) from the September payroll. Record this check in the cash payments journal. 9 sold nerchandise on credit for $2,ase plus sales tax of $102.50 to Ema Maldonado, Sales Slip 242. 10 Issued Check 609 for $1,525 to pay The Daily News for a newspaper advertisement that appeared in October 11 Purchased merchandise for $4,828 fron A Fashion Statement, Invoice 9422, dated October 9; the terms are 2/10, 1/38 12 Issued Check 612 for $395 to pay freight charges to Ace Freight Company, the trucking company that delivered merchandise from A Fashion Statement on September 27 and October 11. 13 Had cash sales of $13, 200 plus sales tax of 5666 during October 8.13 15 Sold nerchandise on credit for $1,940 plus sales tax of 397 to Jates Helmer Sales Slip 243. 16 Purchased discontinued merchandise from Acne Jobbers: paid for it innediately with Check 611 for $5,120. 16 Received 3520 on account from Marian Salib, a credit customer 16 Issued Check 612 for $4,723.6e to A Fashion Statement, a creditor, in payment of Invoice 9422 (54,828.0), less cash discount ($96.40) 19 Issued Check 63 for $7,400 to Teresa Lojay as a withdrawal for personal use. 20 Had cash sales of $13,500 plus sales tax of 5675 during October 15 20 22 Issued Check 614 to City Utilities for $1,492 to pay the monthly electric bill. 24 Sold merchandise on credit for $820 plus sales tax of 541 to Megan Greening, Sales Slip 244. 25 Purchased merchandise for $3,586 from Classy Threads, Invoice 3418, dated October 22: the terms are 2/le, n/30. 26 Issued Check 615 to Regional Telephone for $948 to pay the monthly telephone bill. 27 Had cash sales of $14,240 plus sales tax of 5712 during October 22-27 29 Received Credit Menor andun 175 for 5430 from classy Threads for defective goods that were returned. The original purchase was recorded on October 25. 20 Sold merchandise on credit for $3,450 plus sales tax of 5172.o Any Tranh Sales Slip 245. 29 Recorded the October payroll. The records prepared by the payroll service show the following totals: earnings, $10, 800, social security. 5782.00: Medicare. $152.00; income tax, $2.028: and net pay, 18,916. The excess withholdings corrected an error nade in withholdings in September 29 Recorded the employer's payroll taxes, which were calculated by the payroll services social security. 5702; Medicare, $162; federal unemployment tax, 5118; and state unemployment tax. 5584. This, too, reflects an understatement of taxes recorded in September and corrected in this month. 30 Purchased merchandise for $4.9 from Unique styles, Invoice 5821, dated October 26, the terms are 1/10, 1/30 31 Issued Checks 616 through 610, totaling $8,916.60, to enployees to pay October payroll For the sake of simplicity. enter the total of the checks on a single line in the cash payments journal 31 Issued Check 626 for 5525 to At Janitors for October janitorial services. 510, 180; social security, 5762.00; Medicare, 5162.68 income tax, 31, 620, and net pay, 58,916. The excess withholdings corrected an error made in withholdings in September 29 Recorded the employer's payroll taxes, which were calculated by the payroll service social security, $702; Medicare, 3162; Federal unanploynent tax, $118) and state unemployment tax, $584. This, too, reflects an understatement of taxes recorded in September and corrected in this month. 30 Purchased merchandise for 34, 680 from unique styles, Invoice 5821, dated October 26, the terms are 1/10, n/30. 31 Issued Checks 616 through 619, totaling $8,916.60, to employees to pay October payroll. For the sake of simplicity, enter the total of the checks on a single line in the cash payments journal. 31 Issued Check 620 for $525 to At Janitors for October janitorial services. 31 Had cash sales of $1,800 plus sales tax of 890 for October 29-31. ADJUSTNENTS 31 During October, the firm had net credit sales of $10, 140. From experience with similar businesses, the previous accountant had estimated that 1.0 percent of the firm's net credit sales would result in uncollectible accounts Record an adjustment for the expected loss from uncollectible accounts for the month of October 31 on October 31, an inventory of the supplies showed that itens costing $2,740 were on hand. Record an adjustment for the supplies used in October 31 on September 30, 20x1, the firm purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October 31 On October 1, 201, the fire signed a three-month advertising contract for $5,109 with a local cable television station and paid the full amount in advance. Record an adjustment for the expired advertising for October 31 On April 1, 20x1, the fire purchased equipment for $83,06. The equipment was estimated to have a useful life of five years and a salvage value of $12,500. Record an adjustment for depreciation on the equipment for October 31 Based on a physical count, ending merchandise inventory was determined to be $82,260. Required: Part 1 1. Sales Journal, Purchases Journal, Cash Receipts Journal, Cash Payments Journal, and General Journal Tabs: Analyze the transactions for October and record each transaction in the proper journal. 2. General Ledger, Accts Rec Sub Ledger, and Accts Pay Sub Ledger Tabs: Post the individual entries that involve customer and creditor accounts from the journals to the subsidiary ledgers on a daily basis. Post the individual entries that appear in the general journal and in the Other Accounts sections of the cash receipts and cash payments journals to the general ledger on a daily basis. 3. Sales Journal, Purchases Journal, Cash Receipts Journal, Cash Payments Journal Tabs Total, prove, and rule the special journals as of October 31, 20X1. Post the column totals from the special journals to the general ledger accounts. Scroll down to the bottom to complete both sets of Tabs. Complete this question by entering your answers in the tabs below. Requirement Sales Journal Purchases Journal Cash Receipts Journal Cash Payments Journal General Journal General Ledger Acets Rec Ledger Acets Pay Ledger Part 2 4. Schedule of Acets Rec and Schedule of Acets Pay Tabs Check the accuracy of the subsidiary ledgers by preparing a schedule of accounts receivable and a schedule of accounts payable as of October 31, 20X1. Compare the totals with the balances of the Accounts Receivable account and the Accounts Payable account in the general ledger. 5. Worksheet Tabs Check the accuracy of the general ledger by preparing a trial balance in the first two columns of a 10-column worksheet. Make sure that the total debits and the total credits are equal 6. Worksheet Tabs Complete the Adjustments section of the worksheet using the adjusting transactions 7 Worksheet Tabs Complete the Adjusted Trial Balance section of the worksheet. Then determine the net income ornet loss for October and complete the worksheet 8. Income Statement Tabs Prepare a classified income statement for the month ended October 31, 20X1. (The firm does not divide its operating expenses into selling and administrative expenses.) 9. Sent of Owner's Equity Tab Prepare a statement of owner's equity for the month ended October 31, 20X1 10. Balance Sheet Tabs Prepare a classified balance sheet as of October 31, 20XL 11. Adjusting and Closing Tab: Joumalize and post the adjusting entries and then the closing entries to the General Joumal. 12. Postclosing Tabs Prepare a postclosing trial balance. Complete this question by entering your answers in the tabs below. Requirement Schedule of Schedule of Acts Rec Acets Pay Worksheet Income Statement Stent of Equity Balance Sheet Adesting and Casing Posting Check the accuracy of the Accts Rec subsidiary ledger by preparing a schedule of accounts receivable as of October 31, 20X1. Compare the totals with the balance of the Accounts Receivable account in the general ledger. (Round your answers to 2 decimal places.)