Worksheet Problem - Chapter 8 Prepare the journal entries for the following economic transactions of ABC Retail, Inc. Post the transactions on the T Accounts and then prepare the financial statements for the two months. ABC Retail, Inc. had the following balance sheet at 7/31/19 after the closing entries were prepared. Cash $ 20,000 Inventory $ 60,000 Common Stock $5,000 Retained Earnings $75,000 These amounts have been posted on the T-accounts as beginning balances. 1 8/1/2019 The company loans XYZ, Inc. $5,000.XYZ signs a 60 day note with an interest rate of 6% The company follows federal mandates and uses 365 days in the year to compute interest income. 8/31/2019 The company invoices customers for all sales. The total sales for August were to 2 3 8/31/2019 The cost of goods sold for August was $28,800. 4 8/31/2019 The company prepares its financial statements under GAAP. As such, it uses the allowance for bad debt method. It estimates that bad debts will equal 1% of sales. 5 9/4/2019 One of the customers returns $400 of merchandise sold during August. 6 9/4/2019 The cost of goods sold for the merchadise returned was $240. 7 9/30/2019 The company invoices customers for all sales. The total sales for September were $29,000, 8 9/30/2019 The cost of goods sold for September was $17,400 9 9/30/2019 The company prepares its financial statements under GAAP. As such, it uses the allowance for bad debt method. It estimates that bad debts will equal 1% of sales. 10 9/30/2019 During September the company collected $27,000 of the outstanding accounts receivable from August 11 9/30/2019 The company was notified that one of their customers from August has declared bankruptcy and they will not be able to collect the $280 the customers owes. 12 9/30/2019 The company received payment for the principle and interest on the note receivable from XZY, Inc. Round to the nearest whole dollar and use 365 days (the number of days in 2019 to compute the interest income. General Journal - ABC Retail, Inc. - Complete the entries using the information provided. Date Description (Account/Explanation) Debit 8/1/2019 Entry Credit 13/1/2 8/31/2019 B/31/2019 HA 3 3/31/2010 | * | 131 /2019 5 244/2010 1 * 10/2010 [ "_9130/2013 9/4/2019 9/4/2019 9/30/2019 9/30/2019 9/30/2019 9/30/2019 109/30/2019 11 9/30/2019 129/30/2019 Cash Notes Receivable Interest Income ABC Retail, Inc. Balance Sheet as of September 30, 2019 Assets (debits) Liabilities (credits) Total Liabilities Equity (credits) Common Stock Retained Earnings Total Equity Total Liabilities & Equity Total Assets Income Statement for the Two Months Ended September 30, 2019 Revenue/Income (credits) Sales Less Sales Returns & Allowances Interest Income Total Revenue Retained Earnings Detail Beginning of Year Net Income Dividends Paid Total Retained Earnings Expenses (debits) Total Expenses Net Income