Victoria Company€™s balance sheet at December 31, 2013, is presented below.

During January 2014, the following transactions occurred. Victoria uses the perpetual inventory method.
Jan. 1 Victoria accepted a 4-month, 8% note from Leon Company in payment of Leon's $1,500 account.
3 Victoria wrote off as uncollectible the accounts of Barker Corporation ($450) and Elmo Company ($330).
8 Victoria purchased $17,200 of inventory on account.
11 Victoria sold for $25,000 on account inventory that cost $17,500.
15 Victoria sold inventory that cost $780 to Joe Haribo for $1,200. Haribo charged this amount on his Visa First Bank card. The service fee charged Victoria by First Bank is 3%.
17 Victoria collected $22,900 from customers on account.
21 Victoria paid $16,300 on accounts payable.
24 Victoria received payment in full ($330) from Elmo Company on the account written off on January 3.
27 Victoria purchased advertising supplies for $1,400 cash.
31 Victoria paid other operating expenses, $3,218.
Adjustment data:
1. Interest is recorded for the month on the note from January 1.
2. Bad debts are expected to be 5% of the January 31, 2014, accounts receivable.
3. A count of advertising supplies on January 31, 2014, reveals that $470 remains unused.

Instructions
(You may want to set up T-accounts to determine ending balances.)
(a) Prepare journal entries for the transactions listed above and adjusting entries.
(Include entries for cost of goods sold using the perpetual system.)
(b) Prepare an adjusted trial balance at January 31, 2014.
(c) Prepare an income statement and a retained earnings statement for the month ending January 31, 2014, and a classified balance sheet as of January 31,2014.

Transcribed Image Text:

Victoria Company Balance Sheet December 31, 2013 Cash Accounts reccivable Allowance for doubtful accounts Inventory $13,100 Accounts payable $ 8,750 20,000 12,730 $41,480 19,780 Common stock (800) Retained carnings 9,400 $41,480