The Fashion Rack

The Fashion Rack is a retail merchandising business that sells brand$-$name clothing at discount prices. The firm is owned and managed by Teresa Lojay, who started the business on April $1,20$X$1.$ 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 $20$X$1.$

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 journal. Postings are made from the journals to the accounts receivable ledger, accounts payable ledger, and general ledger. The company must charge a $5\%$ sales tax on all sales. All sales on account have terms n$/30.$ All purchases of merchandise on account have terms of $2/10,$ n$/30.$ The employees are paid at the end of the month. A computerized payroll service prepares all payroll records and checks.

DATE TRANSACTIONS

October $1$ Issued Check $601$ for $$4,400$ to pay Properties Management, Incorporated, the monthly rent.

October $1$ Signed a three$-$month radio advertising contract with Cable Station KTLE for $$5,100$; issued Check $602$ to pay the full amount in advance.

October $2$ Received $$520$ from Megan Greening, a credit customer, in payment of her account.

October $2$ Issued Check $603$ for $$17,820$ to remit the sales tax owed for July through September to the State Tax Commission.

October $2$ Issued Check $604$ for $$7,673\mathrm{.}40$ to A Fashion Statement, a creditor, in payment of Invoice $9387($$$7,830),$ less a cash discount $($$$156\mathrm{.}60).$

October $3$ Sold merchandise on credit for $$2,480$ plus sales tax of $$124$ to Mariam Salib, Sales Slip $241.$

October $4$ Issued Check $605$ for $$1,050$ to BMX Supply Company for supplies.

October $4$ Issued Check $606$ for $$8,594\mathrm{.}60$ to Unique Styles, a creditor, in payment of Invoice $5671($$$8,770),$ less a cash discount $($$$175\mathrm{.}40).$

October $5$ Collected $$1,700\mathrm{.}00$ on account from Amy Trinh, a credit customer.

October $5$ Accepted a return of merchandise from Mariam Salib. The merchandise was originally sold on Sales Slip $241,$ dated October $3$; issued Credit Memorandum $18$ for $$630,$ which includes sales tax of $$30.$

October $5$ Issued Check $607$ for $$1,666$ to Classy Threads, a creditor, in payment of Invoice $3292($$$1,700),$ less a cash discount $($$$34).$

October $6$ Had cash sales of $$18,600$ plus sales tax of $$930$ during October $16.$

October $8$ Received a check from James Helmer, a credit customer, for $$832$ to pay the balance he owes.

October $8$ Issued Check $608$ for $$1,884$ to deposit social security tax $($$$702),$ Medicare tax $($$$162),$ and federal income tax withholding $($$$1,020)$ from the September payroll. Record this check in the cash payments journal.

October $9$ Sold merchandise on credit for $$2,050$ plus sales tax of $$102\mathrm{.}50$ to Emma Maldonado, Sales Slip $242.$

October $10$ Issued Check $609$ for $$1,525$ to pay The Daily News for a newspaper advertisement that appeared in October.

October $11$ Purchased merchandise for $$4,820$ from A Fashion Statement, Invoice $9422,$ dated October $8$; the terms are $2/10,$ n$/30.$

October $12$ Issued Check $610$ 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 $11.$

October $13$ Had cash sales of $$13,200$ plus sales tax of $$660$ during October $813.$

October $15$ Sold merchandise on credit for $$1,940$ plus sales tax of $$97$ to James Helmer, Sales Slip $243.$

October $16$ Purchased discontinued merchandise from Acme Jobbers; paid for it immediately with Check $611$ for $$5,120.$

October $16$ Received $$510$ on account from Mariam Salib, a credit customer.

October $16$ Issued Check $612$ for $$4,723\mathrm{.}60$ to A Fashion Statement, a creditor, in payment of Invoice $9422($$$4,820\mathrm{.}00),$ less cash discount $($$$96\mathrm{.}40).$

October $18$ Issued Check $613$ for $$7,400$ to Teresa Lojay as a withdrawal for personal use.

October $20$ Had cash sales of $$13,500$ plus sales tax of $$675$ during October $1520.$

October $22$ Issued Check $614$ to City Utilities for $$1,492$ to pay the monthly electric bill.

October $24$ Sold merchandise on credit for $$820$ plus sales tax of $$41$ to Megan Greening, Sales Slip $244.$

October $25$ Purchased merchandise for $$3,580$ from Classy Threads, Invoice $3418,$ dated October $23$; the terms are $2/10,$ n$/30.$

October $26$ Issued Check $615$ to Regional Telephone for $$940$ to pay the monthly telephone bill.

October $27$ Had cash sales of $$14,240$ plus sales tax of $$712$ during October $2227.$

October $29$ Received Credit Memorandum $175$ for $$430$ from Classy Threads for defective goods that were returned. The original purchase was recorded on October $25.$

October $29$ Sold merchandise on credit for $$3,450$ plus sales tax of $$172\mathrm{.}50$ to Amy Trinh, Sales Slip $245.$

October $29$ Recorded the October payroll. The records prepared by the payroll service show the following totals: earnings, $$10,800$; social security, $$702\mathrm{.}00$; Medicare,