Recording transactions in T-accounts and preparing a balance sheet Veronica Regaldo creates a new business in Mexico
Question:
Recording transactions in T-accounts and preparing a balance sheet Veronica Regaldo creates a new business in Mexico on January 1, 2008, to operate a retail store. Transactions of Regaldo Department Stores during January 2008 in preparation for opening its first retail store in February 2008 appear below. Regaldo applies IFRS, and reports its results in thousands of Mexican pesos (5).
(1) January 1, 2008: Receives $500,000 from Veronica Regaldo for all of the common stock of Regaldo Department Stores The stock has no par or stated value.
(2) January 5, 2008: Pays another firm $20,000 for a patent, and pays the Mexican government $4,000 to register the patent.
(3) January 10, 2008: Orders merchandise from various suppliers at a cost of $200,000 transactions (5), (6), and (7) below for later information regarding these merchandise orders.
(4) January 15, 2008: Signs a lease to rent land and a building for $30,000 a month. The rental period begins February 1, 2008. Regaldo pays $60,000 for the first two months’ rent in advance.
(5) January 20, 2008: Receives the merchandise ordered on January 10, 2008. Regaldo delays payment for the merchandise until it receives an invoice from the supplier see transaction (7) below.
(6) January 21, 2008: Discovers that merchandise costing 58.000 is defective and returns the items to the supplier.
(7) January 25, 2008: Receives invoices for $160,000 for the merchandise received on January 20, 2008. After subtracting an allowed discount of 2% of the invoke for paying promptly. Regaldo pays the suppliers the amount due of $156,800 (0.98 X $160,000). The firm treats cash discounts taken as a reduction in the acquisition cost of the merchandise.
(8) January 30, 2008: Obtains fire and liability insurance coverage from Windwards Islands Insurance Company for the period beginning February 1, 2008. It pays the one-year insurance premium of $12,000.
a. Record these eight transactions either in T-accounts or a transactions spreadsheet.
b. Prepare a balance sheet for Regaldo Department Stores on January 31, 2008.
Note: Problem 35 extends this problem to income transactions ions for February 2008.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Regaldo Department Store recording transactions and preparing a balance sheet Amounts in Thousands a ...View the full answer
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
