Answer:
journal entries
January 3 Purchase 1,050 units for $115,500 on account ($110 each).
Dr Inventory 115,500
Cr Accounts payable 115,500
January 8 Purchase 1,150 units for $132,250 on account ($115 each).
Dr Inventory 132,250
Cr Accounts payable 132,250
January 12 Purchase 1,250 units for $150,000 on account ($120 each). *110
Dr Inventory 150,000
Cr Accounts payable 150,000
January 15 Return 160 of the units purchased on January 12 because of defects.
Dr Accounts payable 19,200
Cr Inventory 19,200
January 19 Sell 3,600 units on account for $576,000. The cost of the units sold is determined using a FIFO perpetual inventory system.
Dr Accounts receivable 576,000
Cr Sales revenue 576,000
Dr Cost of goods sold 407,350
Cr Inventory 407,350
January 22 Receive $529,000 from customers on accounts receivable.
Dr Cash 529,000
Cr Accounts receivable 529,000
January 24 Pay $359,000 to inventory suppliers on accounts payable.
Dr Accounts payable 359,000
Cr Cash 359,000
January 27 Write off accounts receivable as uncollectible, $2,100.
Dr Bad debt expense 2,100
Cr Allowance for uncollectible accounts 2,100
January 31 Pay cash for salaries during January, $110,000.
Dr Wages expense 110,000
Cr Cash 110,000
adjusting entries
a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each.
Dr Cost of goods sold [110 units x ($120 - $100)] 2,200
Cr Inventory 2,200
b. At the end of January, $5,200 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected.
Dr Bad debt expense 1,560
Cr Allowance for uncollectible accounts 1,560
c. Of the remaining accounts receivable, the company estimates that 5% will not be collected.
Dr Bad debt expense 3,975
Cr Allowance for uncollectible accounts 3,975
d. Accrued interest expense on notes payable for January.
Dr Interest expense 280
Cr interest payable 280
Accrued income taxes at the end of January are $13,500.
Dr Income taxes expense 13,500
Cr Income taxes payable 13,500
adjusted trial balance
debit credit
Cash $84,300
Accounts Receivable $89,500
Inventory $11,000
Land $79,600
Allowance for Uncollectible Acc. $10,335
Accounts Payable $48,750
Interest payable $280
Income taxes payable $13,500
Notes Payable $42,000
Common Stock $68,000
Retained Earnings $46,500
Sales revenue $576,000
Cost of goods sold $409,550
Wages expense $110,000
Bad debt expense $7,635
Interest expense $280
Income taxes expense $13,500
Totals $805,365 $805,365
income statement
Sales revenue $576,000
COGS ($409,550)
Gross profit $166,450
Operating expenses:
- Wages expense $110,000
- Bad debt expense $7,635 ($117,635)
Operating profit (EBIT) $48,815
Interest expense ($280)
Income taxes expense ($13,500)
Net income $35,035
closing entries
Dr Sales revenue 576,000
Cr Income summary 576,000
Dr Income summary 540,965
Cr Cost of goods sold 409,550
Cr Wages expense 110,000
Cr Bad debt expense 7,635
Cr Interest expense 280
Cr Income taxes expense 13,500
Dr Income summary 35,035
Cr Retained earnings 35,035
balance sheet
Assets:
Current assets
Cash $84,300
Accounts Receivable, net $79,165
Inventory $11,000
Total current assets $174,465
Property, plant and equip.
Land $79,600
Total P, P & E $79,600
Total assets $254,065
Liabilities:
Current liabilities
Accounts Payable $48,750
Interest payable $280
Income taxes payable $13,500
Total current liabilities $62,530
Long term liabilities:
Notes Payable $42,000
Total long term liabilities $42,000
Stockholders' equity:
Common Stock $68,000
Retained Earnings $81,535
Total stockholder's equity $149,535
Total liabilities + stockholders' equity $254,065