Prepare journal entries and adjust the journal entries. Account balances as of December 31 debit balance credit
Question:
Prepare journal entries and adjust the journal entries.
Account balances as of December 31
debit balance | credit balance | |||||
100000 | Bank account | 275205 | ||||
110100 | Accounts Receivable (Direct Posting Account) | 92,670 | ||||
110150 | Provision for bad debts | 2,500 | ||||
200600 | Inventory Operation Supplies | 8,832 | ||||
200900 | Inventory-Raw Materials (Direct Mail) | 52,000 | ||||
200910 | Finished Goods Inventory (Direct Post) | 281,298 | ||||
200920 | Inventory Trade Merchandise (Direct Mail) | 66,474 | ||||
210000 | prepaid insurance | 5,000 | ||||
212000 | Prepaid Advertising | 2200 | ||||
215000 | prepaid rent | 2500 | ||||
220110 | Land (Direct Mail) | 528,000 | ||||
220210 | Machinery, equipment and production accessories (Dir.Post) | 915,000 | ||||
220310 | Accumulated Amortization-Machinery (Direct Publication) | 408,000 | ||||
300200 | Accounts Payable (Direct Posting Account) | 49100 | ||||
300700 | Accounts Payable-Wages and Salaries | 92,000 | ||||
300800 | Accumulated expenses | 1200 | ||||
320000 | Accumulated Tax - Departure | 3,000 | ||||
329000 | Common actions | 1,000,000 | ||||
329100 | Additional payment in principal | 55,370 | ||||
330010 | Retained earnings (direct accounting) | 618,009 | ||||
Events during January
Event Date Event Description
1 | January 3 | Employees are paid monthly on the first business day of the month for work performed in the previous month. (Ignore employment taxes for this allowance.) Accounting wrote and distributed the paychecks. |
2 | GBI received $70,000 in inventory of safety products and $30,000 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms of the total invoice of $100,000 are net 10 days. GBI paid shipping company CWX $1,000 by manual check for shipping the goods. The bill of lading showed that the inventory of security products arrived in 6 boxes with a total weight of 50 pounds. and the raw material came on a pallet and weighed 60 lbs. | |
3 | Windy City Bikes in Chicago, IL ordered $22,500 worth of bike accessories from GBI. The cost of accessories (for GBI) is $15,000. The products were shipped to the Windy City immediately via UPS using the Windy City UPS shipping number. The Windy City order payment terms are 3/10 net 30 days. | |
4 | January 7th | GBI received a payment of $22,000 from Northwest Bikes in Seattle, WA for the balance due on your account. |
5 | January 10 | The GBI account on the utility website is updated at the end of each month when the meter is read. GBI uses this data to accumulate expenses at the end of each month (in this case December 31 ) . This allows the expense to be recognized in the correct period. Expenses are generally accrued at the end of the month as "Accrued Expenses." GBI paid the utility bill for December through the company's automatic electronic bill payment program. |
6 | GBI's announcement in the English edition of the Italian Cycling Journal was published today. This ad was paid in advance at the end of August for six months of advertising, from September to February (four months of advertising have already been used). | |
7 | January 11 | GBI received their new product catalogs ordered from a local printer. The printer invoiced GBI $6,000 for 5,000 catalogs with payment terms of net 10. GBI views the catalogs as advertising and spends the catalogs at the end of the month based on the number of catalogs shipped during the month. |
8 | GBI ordered $75,000 worth of raw materials from Space Bike Composites in Houston, TX. The terms of payment to Space Bikes are 30 net. | |
9 | GBI received payment from Windy City Bikes for their order as of January 3. Windy City paid the invoice amount less the discount due to be paid within 10 days. | |
10 | 12th of January | GBI paid for the inventory order (via wire transfer) it received from Dallas Bike Basics on January 3rd. |
11 | January 13th | The GBI owners were talking to the owner of the warehouse they lease. They are good friends. The conversation turned to smart investment of the surplus cash that GBI currently has. The owner of the warehouses stated that he wants to diversify his investments, especially with the real estate market for apartments. He suggested that GBI buy the stores. He said he would give GBI a good deal. GBI decided to purchase only one of the warehouses and continue to lease the other. The price will be $360,000 with a 20% down payment. The original owner will take a mortgage on the remainder at an interest rate of 7.5%. The title will transfer on March 15. Today, GBI sent a $10,000 guarantee to the warehouse owner. |
12 | GBI applied for credit with a new provider, Cycle Partner USA. A credit request was faxed to CP's headquarters in San Antonio, TX. GBI is anticipating an order with HP for $12,000 worth of resale merchandise. | |
13 | January 17 | GBI paid an invoice from Lightbulb Accessories Kits for the ordered goods received on December 20. Lightbulb's invoice amount is $15,890 net due December 30. |
14 | The city of Denver will host a decathlon at the end of February. The event is expected to create demand for high-quality bikes. Rocky Mountain Bikes in Denver, CO, placed an order with GBI for $128,000 worth of bikes for immediate delivery. Rocky Mountain will pay for shipping. The bikes cost GBI $78,000. GBI sent the order right away so Rocky Mountain can start promoting the bikes. Because Rocky Mountain is a good customer, GBI is offering a special 45 day net deal for this order. | |
15 | GBI received an order for raw materials inventory from Space Bike Composites on January 11. Shipping charges of $600 were included in the Space Bike invoice. | |
sixteen | GBI received notice that Bunky's Bicycle Emporium had filed for bankruptcy under section 13, which meant that GBI would not be able to collect the $3,350 Bunky's owed them. | |
17 | January 18 | GBI received a funds transfer of $90,000 from Silicon Valley Bikes in Palo Alto for the balance due on their account. |
18 | SoCal Bikes in Irvine, CA, placed an order for $2,750 worth of bike helmets for a special event in February. The merchandise cost GBI $1,300. SoCal sent a truck to the GBI distribution center in San Diego, CA and picked up the merchandise directly from the GBI warehouse. Payment terms are 30 net. (Don't forget to collect 8.25% sales tax for this order.) | |
19 | January 24 | Beantown Bikes in Boston, MA placed an order with GBI for $27,000 worth of bikes. The cost of the bikes is $17,000. Beantown Bikes is a new client. Your buyers saw the GBI booth at a trade show. Because Beantown is a new customer with no credit, you must wait until your credit is approved or pay for the order before GBI ships the bikes to you. |
20 | January 25 | GBI has been offered the opportunity to advertise in the Bicycle Times online magazine at a reduced price if you pay three months in advance. In light of the upcoming Tour de France, the publicity is a great opportunity for GBI to gain additional recognition. Advertising will begin in February. GBI wrote a check for $9,000 for three months of advertising. |
21 | 26 of January | GBI received notification from their bank that Beantown Binkes had transferred funds to their account for their previous order, so GBI warehouse staff shipped the Beantown order. Beantown will be responsible for paying Fed-X $400 for shipping the order. |
22 | January 27th | The county approved GBI's construction plans for its new warehouse. Estimated construction costs are $1,100,000 which will be financed through a Bank of America mortgage. GBI plans to start construction on the new building on April 18 this year. |
23 | GBI sent a check for $28,000 to Night Rider Aluminum Products for a bicycle parts order that GBI received on December 30. | |
24 | Big Apple Bikes in New York City is expanding to another location in New York and needs to supply the new location. GBI received a phone order from the Big Apple for $230,000 worth of bicycles and $108,500 worth of bicycle accessories and safety equipment at special discount prices. The cost of the bikes in this order is $170,000 and the cost of the accessories is $65,000. Big Apple will have a contracted trucking company pick up the order when it is ready. The order is sent to the GBI warehouse for picking and packing, which can take a couple of days. The payment terms to Big Apple for this order are net 30. | |
25 | January 31 | GBI pays sales tax once a quarter through the state's electronic filing and payment system. GBI filed its return and paid its sales tax for the quarter ending December 31. |
26 | GBI paid the February rent of $4,000 for the office and warehouse space in San Diego. | |
27 | The Big Apple truck arrived at the GBI warehouse and picked up the January 27 order . |
Adjustment information as of January 31, not yet provided in the original transaction(s):
Based on past experience, GBI estimates that approximately 1/2% of net sales (gross sales minus returns minus discounts) for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debt as an adjusting entry each month.
As a control measure, physical inventories alternate between the inventory of raw materials, the inventory of finished products and the inventory of commercial goods. The physical inventory of finished goods inventory was carried out at the end of January. The value of the merchandise available for negotiation was determined to be $49,000.
Production machinery, equipment and fixtures were placed in service on January 1, 2013, with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first fortnight of the month are depreciated for the entire month, while fixed assets put into service during the last fortnight of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar, and assets are depreciated monthly (ie, the number of days in the month does not matter).
GBI received a bill for $2,251 from PG&E for utilities consumed during January and AT&T's bill for January in the amount of $412.
The civil liability insurance for the semester ending on February 28 was paid on September 1. Liability insurance is assumed to be used evenly over the six month policy period.
GBI needs to recognize salary expense for the month. Since all employees receive wages and no changes have been made, this amount is the same as the previous month's wages. (For the purposes of this task, ignore manufacturing and assume that all labor costs will be accounted for as expenses.)
In the month of January, 500 product catalogs were sent.