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 Lolay who started the business on April 1, 20X1. This project ww give you an opportunity to put you 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. All transactions are recorded in a general journal Postings are made from the general journal to the accounts receivable ledger accounts payable ledger, and general ledger. The employees are and 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 682 to pay the full amount in advance. 2 Received $520 from Megan Greening, a credit customer. in payment of her account Issued Check se for $17,029 to remit the sales tax Owed for July through September to the State Tax Comission 2 Issued Check 684 for 37.673.40 to A Fashion Statement, a creditor. In payment of Invoice 9387 (57,836). less a Gash discount ($156.60). a Sold merchandise on credit for 52, 480 plus sales tax of $124 to Marian Salib, Sales Slip 241. 4 Issued Check 605 for $1,050 to BMX Supply Co. for supplies. 4 Issued Check 606 for $8.504.60 to Unique styles, a creditor in payment of Invoice 6671 (0,770). less a cash discount ($175,40). 5 Collected $1,700.00 on account from Any Trinh, a credit customer 5 Accepted a return of merchandise from Marian 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. 5 Issued Check 607 for $1,666 to classy Threads, a creditor, in payment of Tnvoice 3202 ($1,700), less a cash discount (534) O Had cash sales of $18,600 plus sales tax of $930 during October 1-6. B Received a check from James Helmer, credit customer, for $832 to pay the balance he owes 8 Issued Check og for $1,884 to deposit social security tax (3702), Medicare tax ($162), and federal income tax withholding (51,820) from the September payroll Sold merchandise on credit for $2,050 plus sales tax of $102.50 to Emma Maldonado, Sales Slip 242 19 Issued Check 609 for $1,525 to pay The Daily News for a newspaper advertisecent that appeared in October 11 Purchased archandise for $4.020 From A Fashion Statement, Invoice 9422. dated October 8; the terms are 2/18, 16 ure Purchased Check NAM 8 Received a check from Janos Hercredit customer, for 2 to pay the balance he 8 Issued Check og for 11.04 to deposit social security tax (802) Medicare tax (1162): A federal income tax withholding (1,090) from the september payroll Sold merchandise on credit for $2.050 plus sales tax of 5:02. to Maldonado, Sales Stip 24 10 Issued Check 60 for $1.525. to pay The Daily News for newspaper advertisement that appeared in October 11 Purchased merchandise for $4.820 From A Fashion Statement, Invoice 0422, dared October or the terms are 9/10, 12 Check 610 For 5395 to pay freight charges to Ace Freight Company, the trucking company that delivered morchandise from A Fashion Statement on September 27 and October 11 12 Had cash sales of $13,200 plus sales tax of 60 during October 13 15 Sold merchandise on credit for 51.940 plus sales tax of 107 to James Helor sales Slip 245 discontinued merchandise from a Jobbers paid for it toediately with Check 611 for 15,120 16 Received 5610 on account from Marian Salth. credit customer 16 Issued Check 012 for 14.723.60 to A Fashion Statement creditor in pay of those 9422 (1.120.00). In cash discount ($96.40) 18 Issued 613 for 17, 400 to Teresa Lojayas withdrawal for personal use 20 Had cash sales of $13,500 plus sales tax of $875 uring October 15-20 22 Issued Check 634 to city Utilities for $1.400 to pay the monthly electric bill 24 sold merchandise on credit for 2 plus sales tax of $41 to Megan Groening, salep 244 25 Purchased merchandise for $3,580 from Classy Threads, Invoice 248, dated October 23; the terms are/10/0 26 Issued Check 635 to Regional Telephone for $940 to pay the monthly telephone till 27 ad sales of $14,240 plus sales tax of 5712 during October 22-27 29 Received Credit Menorandur 175 for 5430 from Classy Threads for defective goods that were returned. The original purchase was recorded on October 25 29 Sold merchandise on credit for $3,450 plus les tax of $172.50 to Any Trinh, Sales Slip 245 29 Recorded the October payroll The records prepared by the payroll service show the following totalstrings $10,000: social security. 5702.00; Medicare, 5162.00: Income tax, 31,020 and not pay $8.916. The excel 20 Recorded the employer's payroll taxes, which were calculated by the payroll service social security, 3702 Mithholding corrected an error made in withholdings in September understatement of taxes recorded in September and corrected in this month Medicare, $1628 federal unit loyment tax, $118; and state unelyet tas, 500. This too, Petects an 30 Purchased merchandise for $4,000 from unique styles, Invoice 5821, dated October 20, the terms are 1/10, 1/30 31 Issued Checks 616 through 619. totaling 58.915.00, to employees to pay October payroll 31 Issued Check 620 for $525 to A+ Janitors for October Janitorial services a Had cash sales of $1,800 plus sales tax of 59 for October 29-31 cash ed Check through 810, totaling $8.916.00, to employees to pay October payroll 31 Issued Check 020 for $525 to At Janitors for October Janitorial services. 31 Mad cash sales of $1,800 plus sales tax of 500 for October 29-31 ADJUSTMENTS 31 During October, the firm had not 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 $2,748 were on hand Record an adjustment for the supplies used in October 33 On September 30, 2ext, the fire purchased a six-month insurance policy for $8,400. Record an adjustment for the expired insurance for October 31 On October 1, 20x1, the firm signed a three month advertising contract for $5,100 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 firm purchased equipment for $83,000. 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 equipent for October 31 Based on a physical count, ending merchandise inventory was determined to be $82,268. Required: Part 1 1.& 2. General Ledger, Accts Rec Sub Ledger, and Accts Pay Sub Ledger Tabs Post the individual entries from the general journal to the 3.2 4. General Journal Tabs Analyze the transactions for October and record each transaction in the general Journal. Scroll down to the bottom to complete both sets of Tabs Complete this question by entering your answers in the tabs below. Requirement General Journal General Ledger Acets Rec Ledger Acets Pay Ledger Part 2 5. Schedule of Accts Rec and Schedule of Accts 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 6. Worksheet Tab: 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 7. Worksheet Tab: Complete the Adjustments section of the worksheet using the adjusting transactions 8. Worksheet Tabs Complete the Adjusted Trial Balance section of the worksheet 9. Worksheet Tab: Determine the net income or net loss for October and complete the worksheet. 10. 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.) 11. Stmt of Owner's Equity Tabs Prepare a statement of owner's equity for the month ended October 31, 20X1. 12. Balance Sheet Tabs Prepare a classified balance sheet as of October 31, 20X1. 13. & 14. Adjusting and Closing Tabs Journalize and post the adjusting entries and then the closing entries to the General Journal 15. Postclosing Tabs Prepare a postclosing trial balance. Complete this question by entering your answers in the tabs below. Schedule of Schedule of Requirement Accts Rec Accts Pay Worksheet Income Statement Sumt of Equity Balance Sheet Adjusting and Closing Postclosing Prepare a postclosing trial balance. (Round your answers to 2 decimal places) THE FASHION RACK Post-closing Trial Balance Schedule of Schedule of Requirement Income Stmt of Balance Adjusting Accsec Accts Pay Worksheet Statement Equity Sheet and Closing Postclosing Schedule of Acts Rec 5. Schedule of ACCS RECOTU Schreuule of Accts 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. 6. Worksheet Tab: 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. 7. Worksheet Tab: Complete the Adjustments section of the worksheet using the adjusting transactions, 8. Worksheet Tab: Complete the Adjusted Trial Balance section of the worksheet 9. Worksheet Tab: Determine the net income or net loss for October and complete the worksheet. 10. Income Statement Tab: Prepare a cassified income statement for the month ended October 31, 20x1. (The firm does not divide its operating expenses into selling and administrative expenses.) 11. Stmt of Owner's Equity Tab: Prepare a statement of owner's equity for the month ended October 31, 20x1. 12. Balance Sheet Tab: Prepare a classified balance sheet as of October 31, 20x1. 13. & 14. Adjusting and Closing Tab: Journalize and post the adjusting entries and then the closing entries to the General Journal 15. Postclosing Tab: Prepare a postclosing trial balance. Show less Schedule of Accts Rec > Requirement Schedule of Schedule of Income Strnt of Worksheet Balance Adjusting Accts kec Accts Pay Statement Equity Sheet and Closing Postclosing Check the accuracy of the Acts 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 Schedule of Accounts Receivable October 31, 20x1 $ 0.00 Total waar weer Complete this question by entering your answers in the tabs below. Schedule of Schedule of Income Stmt of Balance Requirement Adjusting Accts Rec Worksheet Accts Pay Statement Equity Sheet and Closing Postclosing Check the accuracy of the Acets Payable subsidiary ledger by preparing a schedule of accounts payable as of October 31, 20x1. Compare the totals with the balance the Accounts Payable account in the general ledger. (Round your answers to 2 decimal places.) THE FASHION RACK Schedule of Accounts Payable October 31, 20x1 $ 0.00 Total Worksheet> Prey 1 of 1 !!! Next Requirement Schedule of Schedule of Aucts Rec Acets Pay Worksheet Income Statement Stmt of Equity Balance Sheet Adjusting and Closing Postclosing Prepare a classified balance sheet as of October 31, 20X1. (Amounts to be deducted should be indicated by a minus sign Round your answers to 2 decimal places.) THE FASHION RACK Balance Sheet October 31, 20X1 Assets Current assets 0.00 Prepaid expenses 0.00 0.00 Total current assets plant and equipment mil Total current assets Plant and equipment 0.00 0.00 Total plant and equipment Total assets Liability and Owner's Equity Current liabilities $ 0.00 0.00 0.00 Total liabilities Owner's equity $ 0.00 Total liabilities and owner's equity Som E Adiusting and Closing > View transaction list - X 1 To record estimated loss from uncollectible accounts, based on 1% of net credit sales. 2 To record supplies used. 3 To record expired insurance. 4 To record expired advertising. 5 To record depreciation for month. 6 To transfer beginning inventory. 7 To record ending inventory. Note: = journal entry has been entered Record entry Clear entry Vie 6 To transfer beginning inventory. net 7 To record ending inventory. 8 To record the closure of Revenue Accounts and the Cost of Goods Sold Accounts with credit balances. Credit 9 To record the closure of expense accounts and the cost of Goods Sold Accounts with debit balances. 10 To record the closure of Income Summary Account. 11 To record the closure of Drawing Account. Note : journal entry has been entered Record entry Clear entry View general journal Requirement Schedule of Schedule of Accts Rec Accts Pay Worksheet Income Statement Stmt of Equity Prepare a postclosing trial balance. (Round your answers to 2 decimal plac THE FASHION RACK Post-closing Trial Balance October 31, 20X1 Account Name Debit Credit Totals $ 0.00 $ 0.00