XOS Corporation

First Day Review Problem

XOS Corporation (XOS) sells accounting-related memorabilia at a small store. The company was organized and began operations on January 1, 2016.

Events During January, 2016:

1. On January 1, the owner invested $100,000 cash in the company, receiving 1,000 shares of $2 par value common stock in exchange.

2. On January 1, XOS purchased furniture and fixtures for $30,000. Paid $5,000 cash down, and signed a promissory note with a 12% annual rate of interest for the balance of the purchase price. Note plus interest to be paid in 2 years.

3. On January 1, XOS paid two months rent in advance to mall owners for floor space, $6,000.

4. On January 1, XOS paid a one-year premium for liability and casualty insurance, $1,200.

5. During January, the company purchased merchandise inventory on account for $25,000.

6. During January, sales totaled $48,000 ($28,000 for cash and $20,000 on credit). The cost of the merchandise sold was $20,000. XOS uses a perpetual inventory system.

7. During January, the company paid wages totaling $3,000.

8. During January, payments on account to suppliers of inventory totaled $9,000.

9. During January, a customer ordered 100 custom-made t-shirts saying SOX ROX!-for delivery in February, 2016. XOS required payment in advance ($1,000) for the entire order.

10. During January, customers paid $10,000 to XOS for sales made on credit

Additional Information:

The furniture and fixtures have an expected useful life of 5 years and zero expected salvage value. XOS uses the straight-line method of depreciation.

At January 31, employees have earned wages of $1,000 that will not be paid until February.

Utilities charges for January are estimated to be $600. However, the utilities bill will not be received and paid until mid-February.

Requirements

3. Prepare an unclassified Balance Sheet and Statement of Retained Earnings as of January 31, a single-step Income Statement, and a Statement of Cash Flows (Direct Method) for the month ended January 31.

4. Prepare any necessary closing journal entries at January 31. Then prepare a post-closing trial balance.

Cash Accts. Receivable Prepaid Rent d. Insurance Mdse. Inventor Furniture & Fixtures 100 100,000 28,000 10,000 1,000 5,000 6,000 1,200 3,000 9,000 20,000 10,000 6,000 3,000 1,200 25,000 20,000 30,000 10,000 3,000 1,100 5,000 30,000 114,800 Acc. Depreciation Accounts Payable Unearned Revenue Interest Pavable Wages Payable Utils. Fayable 500 9,000 25,000 1,000 250 1,000 600 500 16,000 ,000 250 1,000 600 Notes Payable Common Stock Additional PIC Retained Earnin Sales Revenue Cost of Goods Sold 25,000 2,000 98,000 48,000 20,000 48,000 20,000 25,000 2,000 98,000 Depr. Expense Interest Expense Rent Expense Insurance Expense Wages Expense Utilities Ex 3,000 1,000 500 250 3,000 100 600 500 250 3,000 100 4,000 600