Precious Dax was incorporated on January $1,2023,$ to buy and sell precious metals, namely gold and silver. The company just completed the first month of operations in its second year, $($i$.$e$.,$ January $2024).$ You have been asked to $$close the books$$ and report the first month$$s operations.

 Prepare $($i$)$ Journal the entries for January, including any adjusting journal entries and $($ii$)$ the Income Statement and Balance Sheet. Create new GL accounts if required by inserting a line in the excel $$TB$$ tab. 

 

Precious metals are tax exempt $($no sales tax is paid on purchases or charged on sales$).$

Date

Jan $2,2024$

Jan $4,2024$

Jan $6,2024$

Jan $12,2024$

Jan $14,2024$

Jan $20,2024$

Jan $21,2024$

Ref #

$1$

$2$

Declared a dividend of $$5$ per common share. The dividend is payable February $1$st$.($See Statement of Shareholder Equity on page $2).$

Paid $$24,000$ premium to renew the insurance policy$$ the policy runs from Jan $1,2024,$ to Dec $31,2024.$

Received an invoice for $$8,000$ plus GST $5\%$ from a supplier for repairs to the windows of the warehouse. The invoice is payable in $30$ days.

Collected the balance due from the new customer who purchased $3,000$ ounces of silver on December $20$th$.$ The customer paid early and as a result benefited from a $1\%$ early payment discount.

Ran a payment batch and paid off $$117,000$ of the Accounts Payable.

Purchased $7,000$ ounces of silver at $$35$ per ounce$$ payable in $30$ days.

January operating expenses were $$7,200,$ payable in February $2024.$

$3$

$4$

$5$

$6$

$7$

$8$

Description

Sold $2,000$ ounces of silver for $$60$ per ounce and $10$ ounces of gold for $2,900$ per ounce. Terms are $50\%$ net $30$ days. $($See inventory report on page $2).$ The company uses the FIFO method for inventory costing.

Jan $29,2024$

$9$

Salaries for the month of January of $$10,500$ will be paid Feb $1$st$.$ Income tax withholding of $25\%$ applies. $($Ignore EI and CPP or any employer portion$).$The Company has implemented a new bonus plan in $2024$ where employees will receive $10\%$ of their gross salaries as a bonus payable next year. The company is on track to pay the bonus.

Jan $30,2024$

$10$

Precious Dax receive a legal letter from a former employee who was injured in April $2023$ unloading gold bullion from a truck. The employee is no longer able to work and is suing for $3$ years wages $($$$150,000).$ Your lawyer believes the employee will win in labour court and recommends you settle for $$120,000,$ an amount he knows the employee will accept to close the matter.

Jan $31,2024$

$11$ The company estimates that $5\%$ of the ending accounts receivable will not be collected $($update the AFDA provision accordingly$).$