1.

Design Your Own T-Shirt
Trial Balance
September 30, 2019
	DR	CR
Cash	575,000
Prepaid Insurance	1,890,000
Office Equipment	4,500,000
Accumulated Depreciation, Office Equipment		680,000
Inventory	2,250,000
Accounts Receivable	1,500,000
Estimated Returns Inventory	175,000
Notes Payable (Due in 6 months)		339,900
Notes Payable (Due in 2025)		2,360,000
Office Supplies	395,000
Store Equipment	5,000,000
Accumulated Depreciation, Store Equipment		1,825,000
Accounts Payable		1,025,000
Salaries Payable		295,600
Customer Refunds Payable		210,000
Retained Earnings, January 1		3,000,000
Dividends	100,000
Cost of Goods Sold	5,000,000
Sales		12,500,000
Common Stock		3,500,000
Office Supplies Expense	65,000
Depreciation Expense, Store Equipment	225,000
Depreciation Expense, Office Equipment	80,000
Interest Expense	97,600
Miscellaneous Selling Expense	80,000
Sales Salaries Expense	950,000
Rent Expense	1,200,000
Office Salaries Expense	315,000
Advertising Expense Insurance Expense	1,250,000
	87,900
Totals	25,735,500	25,735,500

2. Transactions for October-December:

October 5, the company purchased $35,000 of inventory on account from ABC Company. The invoice terms were 2/20, n/60. October 10, Design Your Own T-Shirt sold $185,000 of merchandise to Sony, Inc. The inventory cost was $74,000, and the invoice terms were 1.5/20, n/60. October 11, the company hired three additional workers for the office.

The employees will all be paid $200 each per day for a 5-day work week (pay date is the end of each month). October 15, returned $5,000 of the merchandise purchased from ABC Company. October 25, received the electric bill. The total bill was for $8,000 and is due on November 5. The company’s policy is to accrue for expenses at the end of each month. Also, October 25, paid for the ABC Company merchandise purchased less the return.

Two transactions occurred on October 30: received the total payment from Sony, Inc. and Design Your Own T-Shirt purchased merchandise from XYZ Company, the invoice amount was $50,000, terms FOB Shipping Point, 2/20 n/60. Prepaid freight of $500 was added to the invoice amount.

Two transactions occurred on October 31: paid the employee salaries for the month of October (employees worked for 15 days in October), and accrued for the monthly electric bill.

November 1, sold $250,000 of merchandise to Walt Disney. The cost of the merchandise was $100,000 with terms 1.5/20, n/60. November 5, paid for the accrued electric bill. November 19, paid the XYZ invoice. November 21, received the total amount due from Walt Disney. November 30, paid the monthly salaries (employees worked for 21 days in November).

Four transactions occurred in the month of December. December 5 purchased merchandise for $75,000 cash from ABC Company. December 10, Walt Disney returned merchandise, the customer was paid a cash refund of $45,000. The cost of the returned merchandise was $18,000. December 15 sold $110,000 of merchandise to Indy Film Group. The inventory cost was $44,000 with terms 1.5/20, n/60. December 31, paid the monthly salaries for the employees (employees worked for 22 days in December).

3. Instructions:

Design Your Own T-Shirt has hired you to do the following [Please complete the steps in the order presented]:

1. Prepare a corrected Trial Balance for September 30, 2019 (see Exhibit 1).
2. Prepare the required journal entries for October, November & December (See the attached General Journal Working Papers).
3. After preparing the journal entries, open the following T Accounts. (Please note that all of the below accounts have a beginning balance on the September 30 Trial Balance). See the attached General Ledger Working Papers:

a. Cash
b. Accounts Receivable
c. Inventory
d. Estimated Returns Inventory

e. Accounts Payable

f. Customer Refunds Payable

g. Sales
h. Cost of Goods Sold

i. Office Salaries Expense

j. Utilities Expense

4. Prepare the following statements for the Year Ended December 31, 2019:

a. Trial Balance

b. Multiple Step Income Statement

c. Retained Earnings Statement
d. Classified Balance Sheet

Answer rating: 100% (QA)

1 Trial Balance Particulars Adjusted trail balance Cash ac 761775 Prepaid Insurance ac 1890000 Office equipment ac 4500000 Accumulated depreciation office equipment ac 680000 Inventory ac 2205000 Acco... View the full answer