1) Prepare the journal entries required on the ‘JE’ tab in good form. The information for the journal entries is contained below are summarized activity from the entire year.  

2) Post those journal entries to T‐accounts from step 1 on the ‘T‐acct’ tab. You will be adding to the existing T‐ account balances.  

3) Prepare adjusting journal entries on the ‘ADJ’ tab in good form using the adjusting information below. Then post the adjusting journal entries to the T‐accounts you created in step 2 on the ‘T‐acct’ tab.

4) Make a Cash Reconciliation Bank Balance Sheet

4) Prepare an adjusted trial balance on the ‘ADJ TB’ tab using the updated balances from step 3 in the t‐accounts from the ‘T‐acct’ tab.

Information for ‘Rachael's Shoes Store’:

Sales for the year totaled $16,520,500 on credit. The inventory sold to customers had a cost to Tucker of $8,976,275. The FIFO method of inventory costing is used on Rachael's Shoes Store.  

The year of Inventory purchases totaled $8,970,300 on credit.

Rachael received cash from customers in the amount of $16,120,400. This amount was for payment representing $16,296,200 of accounts receivable and included sales discounts of $175,800.    

Rachael made a payment in cash to their supplier of inventory in the amount of $8,807,450. This payment amount represents $8,988,700 of accounts payable. Discounts were taken by Rachael on $181,250 worth of supplier payments. .

Supplies were bought in the amount of $111,500 for cash.  

A decision was made that $15,250 owed by a customer was uncollectible and was never received, based on an analysis of accounts receivable. Rachael's decision is to write off this specific amount.  

Rachael hired an advertising agency to promote his business. This contract requires Ron to make a payment of $17,850 over the 12‐month period. Ron paid all of besides the $1,500 of this amount.  

Throughout the year, Rachael had customers return a total amount of $19,860 of merchandise which cost Rachael $10,923. These returns were made by customers who had not yet paid Rachael's Shoes Store.  

Throughout the year, Rachael returned $5,000 of inventory to the supplier. At the time of the return, Ron had not paid for the inventory.

On February 1st, Rachael’s sold a piece of equipment that first cost $50,000. Rachael had owned the equipment for 18 months. The equipment was depreciated on a straight‐line basis with no salvage value and a useful life of 10 years. Rachael was given $55,000 in cash for the equipment.  

Total wages paid to employees for the year were $520,000. This included the payment of wages payable that was owed on February 1st.  

Total taxes paid for the year were $130,600. The payment of taxes payable that was owed on February 1st was included.  

On June 1st, Rachael made a payment of $118,000 for an insurance policy to be used for the next 1‐year period.  

Rachael withdrew $200,000 cash from the company.  

Adjusting Entries:

Rachael rents out a storage facility near the location of her company. The contract signed with the owner of the storage facility states that $8,080 of rent is due each month. Rachael prepaid this rent as shown in the Prepaid Rent account. Adjust for the current 12 months of rent used.  

The Prepaid Insurance of $96,300 on January 1st represents insurance used from January 1 thru October 31. The $118,000 payment of insurance made on November 1st represents insurance for the period November 1 thru October 31 of the next year (12 months). Adjust for 12 months of insurance used from January 1 – December 31 of this year.

A physical count of supplies at year end showed the $32,570 remained in the storage cabinet.  

As of December 31st, $7,800 of wages to employees have been earned but not paid. These wages will be paid in the next year. (These wages are not reflected in the prior information given.)

Depreciation is taken based on the straight‐line method of calculation. Use the following information is given for the assets that Rachael owns and adjust for the current year’s depreciation:

Equipment: no salvage value, 10‐year useful life

Building: $150,000 salvage value, 35‐year useful life

Vehicles: $20,000 salvage value, 8‐year useful life

Land: Indefinite Value  

Rachael received his bank statement from First National Bank stating that the cash balance on December 31st was $6,776,025. A check figure for your cash t‐account is $6,601,700. (This is what cash should be after you posted all of your reoccurring journal entries above.) The following information was given to you by the accountant:

‐ A service charge of $425 was included on the bank statement.  

‐ A customer's check in the amount of $7,750 was not able to be cashed. It was listed as non‐sufficient funds (NSF) on the bank statement.  

‐ Deposits in transit on December 31st were $560,000. (This deposit was put in the overnight box at the bank.  

‐ Outstanding checks for the period were $742,500. (These checks have been written to the

supplier but not cashed.)

Rachael estimates bad debt expense as a percentage of ending accounts receivable. Rachael estimates that 8% of ending accounts receivable will not be collected. A check figure for Accounts Receivable is $498,240. (This is what Accounts Receivable should be after you posted all of your reoccurring journal entries and adjusting entries above.)

The market value of inventory is calculated at $38,021. The check figure for Inventory is $38,148. (This is what Inventory should be after you posted all of your reoccurring journal entries.) Use the lower of cost or market rule to adjust inventory is necessary.

Answer rating: 100% (QA)

1 JE Dr Accounts Receivable 16520500 Cr Sales 16520500 Dr Inventory 8976275 Cr Accounts Payable 8976275 Dr Cash 16120400 Cr Accounts Receivable 162962... View the full answer