Harriet's Hats is a retailer who buys hats from a manufacturer and then sells them in...

 

 

Transcribed Image Text:

Harriet's Hats is a retailer who buys hats from a manufacturer and then sells them in its stores. The following information includes the company's December 31, 20Y8 Balance Sheet and the details of transactions that occurred duning 20Y9 Read through the entire assignment as least twice to become familiar with all of the important facts before beginning any work. Then complete each of the requirements on the following pages, using the provided templates. Harriet's Hats Incorporated Balance Sheet As of December 31, 20Y8 ASSETS Cash $18,000 Accounts Receivable 5,000 Less: Allowance for Doubtful Accounts (400) 4,600 1,400 2,000 Net Accounts Receivable Prepaid Rent Inventory Property, Plant, and Equipment Less: Accumulated Depreciation 52,100 (22,600) Net Property, Plant, and Equipment 29,500 $55,500 Total Assets LIABILITIES + OWNER'S EQUITY Accounts Payable Wages Payable Interest Payable Income Taxes Payable Notes Payable $3,500 165 45 850 3,000 Total Liabilities 7,560 Common Stock Retained Eamings 21,000 26,940 Total Ouner's Fauity 47940 TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 20Y9 1. Sales and Accounts Receivable A The sales price of each hat was $39. All sales were on account B. Cash collections on account amounted to $43,960. C. The company identified $250 of receivables as being uncollectible and wrote them off. D. The company follows a percentage-of-receivables approach to estimate its accounts receivable that will become uncollectible. As of the end of 20Y9, the company estimates that 8% of its receivables will be uncollectible. 2 Inventory A The company began the year with 200 hats which had a cost of $10.00 each. The following purchases (all on account) were made during 20Y9: January 15 – 525 hats @ $11.00 each March 23 - 365 hats @ 12.00 each July 2– 430 hats @ $13.50 each Ocober 31- 450 hats @ $14.00 each B. Employees performed a physical count at end of 20Y9 and found that 480 hats remained in the warehouse. The company uses a periodic LIFO inventory system. C. The company made cash payments to inventory suppliers totaling $19,000. 3. Property, Plant and Equipment A Below is a schedule of the store fixtures and office equipment the company had in place at the end of 20Y8 Straight- line depreciation is used for all store fixtures and office equipment PROPERTY, PLANT & EQUIPMENT (as of December 31, 20Y8) Salvage Value $500 Date Acquired Jan 1, 20Y4 Jan. 1, 20Y7 Jan 1, 20Y8 Historical Cost Useful Life Asset ID # 1256 $18,500 $2,600 $31,000 6 years 3 years 5 years 1876 $200 4299 $1,000 B. On January 1, new store fixtures were purchased for $5,000 in cash. The company expects the fixtures to have a 5- year useful life and a $500 salvage value. C. On July 1, office equipment (ID#1256) was sold for $1,800. 4. Debt A On October 1, 20Y9, the company paid-off the note payable that was outstanding at the beginning of the period The note was issued on October 1, 20Y8 with a 6% interest rate, It required semi-annual interest payments on March 31 and September 30. B. On November 1, 20Y9, the company borrowed $4,500 on a new 1-year note payable. This note carries a 4% interest rate with similar payment terms as the note that was just paid-off. 5. Operations A Once any prepaid rent from 20Y8 was used, two more rent payments of $4,800 were made on March 1 and September 1 of 20Y9 for their store building. Each rent payment is prepaid for sIx months. The balance in the prepaid account at the end of 20Y9 represents the rent for January and February 20Y10. B. Cash paid out for wages during 20Y9 totaled $11,600. Records indicate that salaries for the last week of December amounted to $200 and would be paid at the end of the first week in January (a two-week pay period). C. Other expenses that were paid in cash totaled $1,750. 6. Income Taxes A The company paid its 20Y8 income taxes in March of 20Y9. B. The company has a 30% income tax rate for both 20Y8 and 20Y9. 7. Common Stock A Dividends of $2,200 were declared and paid during 20Y9. B New common stock was issued for $15,000 during 20Y9. INTRO REVIEW HANDOUT | PAGE 2 Record the 20Y9 transactions in the general journal, including closing entries. Label each transaction according to its corresponding number (i.e. 1A, 2A, CL1, CL2, etc.). REQUIRED Harriet's Hats is a retailer who buys hats from a manufacturer and then sells them in its stores. The following information includes the company's December 31, 20Y8 Balance Sheet and the details of transactions that occurred duning 20Y9 Read through the entire assignment as least twice to become familiar with all of the important facts before beginning any work. Then complete each of the requirements on the following pages, using the provided templates. Harriet's Hats Incorporated Balance Sheet As of December 31, 20Y8 ASSETS Cash $18,000 Accounts Receivable 5,000 Less: Allowance for Doubtful Accounts (400) 4,600 1,400 2,000 Net Accounts Receivable Prepaid Rent Inventory Property, Plant, and Equipment Less: Accumulated Depreciation 52,100 (22,600) Net Property, Plant, and Equipment 29,500 $55,500 Total Assets LIABILITIES + OWNER'S EQUITY Accounts Payable Wages Payable Interest Payable Income Taxes Payable Notes Payable $3,500 165 45 850 3,000 Total Liabilities 7,560 Common Stock Retained Eamings 21,000 26,940 Total Ouner's Fauity 47940 TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 20Y9 1. Sales and Accounts Receivable A The sales price of each hat was $39. All sales were on account B. Cash collections on account amounted to $43,960. C. The company identified $250 of receivables as being uncollectible and wrote them off. D. The company follows a percentage-of-receivables approach to estimate its accounts receivable that will become uncollectible. As of the end of 20Y9, the company estimates that 8% of its receivables will be uncollectible. 2 Inventory A The company began the year with 200 hats which had a cost of $10.00 each. The following purchases (all on account) were made during 20Y9: January 15 – 525 hats @ $11.00 each March 23 - 365 hats @ 12.00 each July 2– 430 hats @ $13.50 each Ocober 31- 450 hats @ $14.00 each B. Employees performed a physical count at end of 20Y9 and found that 480 hats remained in the warehouse. The company uses a periodic LIFO inventory system. C. The company made cash payments to inventory suppliers totaling $19,000. 3. Property, Plant and Equipment A Below is a schedule of the store fixtures and office equipment the company had in place at the end of 20Y8 Straight- line depreciation is used for all store fixtures and office equipment PROPERTY, PLANT & EQUIPMENT (as of December 31, 20Y8) Salvage Value $500 Date Acquired Jan 1, 20Y4 Jan. 1, 20Y7 Jan 1, 20Y8 Historical Cost Useful Life Asset ID # 1256 $18,500 $2,600 $31,000 6 years 3 years 5 years 1876 $200 4299 $1,000 B. On January 1, new store fixtures were purchased for $5,000 in cash. The company expects the fixtures to have a 5- year useful life and a $500 salvage value. C. On July 1, office equipment (ID#1256) was sold for $1,800. 4. Debt A On October 1, 20Y9, the company paid-off the note payable that was outstanding at the beginning of the period The note was issued on October 1, 20Y8 with a 6% interest rate, It required semi-annual interest payments on March 31 and September 30. B. On November 1, 20Y9, the company borrowed $4,500 on a new 1-year note payable. This note carries a 4% interest rate with similar payment terms as the note that was just paid-off. 5. Operations A Once any prepaid rent from 20Y8 was used, two more rent payments of $4,800 were made on March 1 and September 1 of 20Y9 for their store building. Each rent payment is prepaid for sIx months. The balance in the prepaid account at the end of 20Y9 represents the rent for January and February 20Y10. B. Cash paid out for wages during 20Y9 totaled $11,600. Records indicate that salaries for the last week of December amounted to $200 and would be paid at the end of the first week in January (a two-week pay period). C. Other expenses that were paid in cash totaled $1,750. 6. Income Taxes A The company paid its 20Y8 income taxes in March of 20Y9. B. The company has a 30% income tax rate for both 20Y8 and 20Y9. 7. Common Stock A Dividends of $2,200 were declared and paid during 20Y9. B New common stock was issued for $15,000 during 20Y9. INTRO REVIEW HANDOUT | PAGE 2 Record the 20Y9 transactions in the general journal, including closing entries. Label each transaction according to its corresponding number (i.e. 1A, 2A, CL1, CL2, etc.). REQUIRED

Answer rating: 100% (QA)

General Journal entries for the year ended December 31 20Y9 Note Account titles and Debit credit 1A Acc Receivable149039 58110 Sales 58110 1B Cash AC ... View the full answer