Carrie Wilson and four of her friends decided to create a new business called Puppies and Toys
Question:
Carrie Wilson and four of her friends decided to create a new business called “Puppies and Toys Corp.”, to import and sell the Fuzzy Puppy toys for children. During December of 2017, they have realized the following transactions: (V.A.T. 18%, inventory evaluation method will be chosen to increase the profit in the balance sheet in perpetual way and straight-line method for the depreciation)
Dec. 1 They have undertaken to deposit $30,000 each in cash and Carrie is to transfer some office furniture with a value of $12,000 (Estimated useful life 5 years) and computer equipment worth $7,000 (Estimated useful life 5 years). The same day they have deposited only $20,000 each in cash and the assets that Carrie had promised.
Dec. 2 Carrie Wilson as the manager of the business opened a bank account in the name of the business and deposited $60,000, received a chequebook.
Dec. 3 Rented a shop in a mall for $3,000 monthly rent, paid 6 months rent by a daily cheque.
Dec. 6 Purchased 3,000 pcs. of puppy toys for $10 each, paid the bill from the bank account, accepted the bill for assembling of the toys for $1.80 per piece and the bill for the carriage freight $0,20 per piece. Received the toys in the inventories.
Dec. 9 Bought a new van for $15,000 to distribute the toys paid $2,700 in cash and signed 30 equally amounted notes monthly payable for the balance. (Estimated useful life 5 years)
Dec. 10 Billed and delivered 2,400 pieces of toys for $26 each, received $13,632 in cash and 48 monthly notes for $1,000 each.
Dec. 14 Received $20,000 cash prepayment for a sales agreement signed with Pocahontas Toys Co.
Dec. 18 Purchased from another importer 12,000 pieces of toys $14 each, issued a matured cheque.
Dec. 19 An ad (advertisement) to appear in the next month’s bulletin is $700 and paid in cash.
Dec. 23 Billed and delivered 10,200 pieces of toys to different clients, average price is $29, received $49,044 cash and 30 equal monthly notes for the balance.
Dec. 26 Billed and delivered to Pocahontas Toys Co. 500 pieces of toys for $24 each.
Dec. 30 Paid the note given for the van.
Dec. 31 Accrued the wages of the salesmen $3,200 to be paid on the 5th of the following month.
QUESTION:
Make the closing record of the V.A.T. accounts, for the cost flow assumption the method to present the highest profit in the statements and for the depreciation record straight-line method will be used.
College Accounting A Practical Approach
ISBN: 978-0132564441
11th Canadian Edition
Authors: Jeffrey Slater, Brian Zwicker